Category:SXFO

SX from the open. Since stop is far above, computers have to reduce risk, usually do it by reducing position size, which means buying back shorts. Bears got a surprise gift, they took profits, wait at least ten bars two legs (TBTL) before selling again. So odds are 10 or more bars of sideways to up after extreme sell climax^[1].

Since it is Climax, so unlikely to last all day, traders should expect 2 hours trading range, or trend reversal up (look for two legs up)^[2]. If later there is a strong reversal up from the big SXFO, it often lasts all day but usually will not go far above the earlier high, example: 20230502. Also, when there are consecutive SX from the open, it usually is a PWB-O, and when there is a PWB from the open, traders should be thinking about ORVU^[3], forming LOD. See also BXFO.

Reasons that increasing the chance of strong reversal after SXFO:

• Bears have big stops and they need to reduce risk
• Some bears got unexpected big profit from the strong sell off so they are eager to take at least some profit^[4]