Oddly enough, I thought that this thread might grow wings and fly, but doesn't seem to be in the general flight path of the ET herd.
Interesting thread, BM. We all have our own take on the matter. Here's mine. My own trading is largely mechanical in that unless price action meets certain minimum criteria, I won't even consider a trade no matter how good the price action appears. The preconditional criteria reflect my understanding, based on observation and personal experience, of what normally precedes at least a bit of imminent directional movement of an unknowable amount. There is no "probability" per se. Rather, there is only a balance of probability, which is not nearly as refined. On balance, and based solely on my own approach, some setups are better than others. For example, some setups barely meet my predefined criteria whereas others comfortably exceed the minimum of what I am looking for in a setup. Also, and especially during erratic price action, some setups meet the letter of the predefined setup requirements but not the spirit. Often, the best setups are fairly obvious. But not always. And so, for better or worse, I tend to pick and choose, especially when it comes to marginal setups that barely meet my requirements during erratic price action or after a losing spell.
RN makes a great deal more sense than you do right now. You will need to expand your post into greater detail
That is a pity really, as I imagined you would welcome the opportunity to expand on your knowledge, particularly since you had gone to all the trouble of posting some it in the first instance.
What part does the size of the pullback play to indicate a potential setup? It appears from what you have described that you're looking for a smaller sized pullback (< z bars) that then fails to make a HH as a potential reversal?
Then they are not all "50/50" after all, are they? Not that I am suggesting placing a number on the "probability" of it, but some setups are better than others a priori. The outcome, as always, is another matter. I think you are unnecessarily combining two issues here. I personally don't like the term "high probability setup" because I don't believe you can really attach a numeric probability to a setup with any real accuracy or reliability. However, that does not diminish the fact that some setups are better than others (a priori) irrespective of what the outcome of the trade may actually be. However, just because a setup comfortably exceeds minimum setup criteria, thereby rendering it, however erroneously, a "high probability setup," doesn't automatically mean that the trader will or should hold onto it if the trade moves against him beyond whatever exit point he had (pre)determined. Once a trade is in play it more or less lives and dies by its own merit. Just my two cents in an ongoing and friendly discourse.