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Eighty Percent Rule

A futures trading technique which operates under the assumption that if a market opens outside its value area (where 70% of the prior session’s volume traded) and then trades into value for two consecutive 30 minute periods, there is an 80% chance that the market will rotate all the way to the other side of value.
For example, lets say the value area in the /ES is 1275 – 1280 and the market opens on a gap down at 1270. During the course of the morning it trades higher and two 30 minute consecutive periods trade above 1275. There is now an 80% chance that the market will trade to 1280 before the end of the day.
Some important notes:
–Neither 30 minute period has to close inside of value in order for the rule to be satisfied, just needs to trade inside it.
If the first 30 minute period closes inside of value, then the rule is automatically satisfied as that implies that the second one will open inside of value. You need not wait for the second 30 minute period to close.
–The rule works both ways, whether the market is moving down from above the value area or up from below it.
–If the market opens up inside of value and then trades out of value, the rule applies the same way. If the market can trade back inside value for two consecutive 30 minute periods, then it has an 80% chance of rotating to the other side of value.
–Context is extremely important. Do not trade this rule mechanically and expect to have good results. Always judge the strength of any directional move in terms of market internals, overall pattern, tempo, and where the current range sits in relation to prior areas of balance.