Bar Definition 20/20
It is defined with Candela or Barra 20/20 that with a wide range and opening and closing near the ends.
The denomination 20/20 comes from the fact that, theoretically, the opening must be in the lower 20% (or higher in the bearish case) of the bar and the closing must be in the top 20% (lower in the bearish case).
The importance of a 20/20 bar is determined by the preceding bar: if the previous bar has the same direction as the 20/20 bar then we can consider that the 20/20 bar is relevant. Below is a graph showing two bars 20/20, a bassist and the other bull:
Based on this introduction on bars 20/20 then we will show some strategies based on this concept.
GAP strategy "N" Snap Play (medium-term trading, stock market)
In order to implement this strategy, the following conditions must be fulfilled:
The asset analyzed must have fallen (uploaded) for at least two days in a row, the last session being a bar 20/20 bearish (bull).
If in the third session the price opens with a hole and starts to go up (lower) we must buy (sell) when it exceeds the minimum (maximum) of the previous day (the 20/20 bar), placing a loss stop below the minimum (above the maximum) of the session.
The closing of the position can be done at the end of the session, two days later, if the bar range is higher than the bar 20/20, etc.
Below is a real graphic example where you could have applied the Gap "N" Snap Play
strategy:
Gap Surprise Strategy (medium-term trading, stock market)
In order to implement this strategy, the following conditions must be fulfilled:
The analyzed asset must have fallen (uploaded) for at least two days in a row, the last session being a 20/20 bar (bull) of wide range. Likewise the volume of the bar 20/20 must be higher than the average.
If in the third session the price opens with gap upward (downward), we enter buying (selling), however sometimes we can apply a light filter to avoid the volatility of the first few minutes of the market for which we will enter buying (selling) if the Price exceeds the maximum (minimum) of the first 5 minutes of negotiation. In this case the maximum (minimum) would be used as a resistance (support).
We then place a stop slightly below the minimum (maximum) of the session.
The closing of the position can be done at the end of the session, two days later, if the bar range is higher than the bar 20/20, etc.
Below are three real graphic examples where you could have applied l
A strategy 20/20 Play:
Strategy Bull/Bear Trap (medium-term trading, stock market)
In order to implement this strategy, the following conditions must be fulfilled:
The last session bar must be very bullish (bearish); You must also check the requirements of a 20/20 bar (although it does not need to have an exceptionally wide range) and present a high negotiating volume
In the next session a strong opening must be produced.
We enter selling (buying) placing a stop of sale (purchase) slightly below the minimum (above the maximum) of the bullish session (bearish).
Alternatively you can sell (Buy) in advance, at the end of the bullish session.
Then we place a stop of losses above the maximum (below the minimum) of the current session or the previous day, whichever is greater (minor). > Closing the position can be made when we obtain 2 to €3 of profit per share or 5 days after the position has been opened.
Below is a real graphic example where the Bull/Bear Trap strategy could have been applied:
Bullish strategy/Bearish Mortage Play (medium term trading, stock market)
In order to implement this strategy, the following conditions must be fulfilled:
The Bar No. 1 of the pattern must be a bar 20/20 bearish (bullish).
Bar # 2 should open above the maximum (below the minimum) of Bar # 1.
At the moment we see this training, we will enter buying (selling) and set the stop of losses below the minimum (above the maximum) of Bar No. 1; Depending on the range of this bar, the risk can be quite high so it is recommended to use this strategy with enough capital in the account.
We must keep a stop behind the price until one of the following situations is achieved: Our profit target is reached, the minimum of a bearish bar is lost (the maximum of the bullish bar is exceeded) or an upward hole (downward) is produced.
Below is a real graphic example where you could have applied the strategy Bullish/Bearish Mortage Play:
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