🔵The Blue Line Rule
The Blue Line and 3-Strike Rule are core components of the RIGGED AI trading system.
Last updated
The Blue Line and 3-Strike Rule are core components of the RIGGED AI trading system.
Last updated
The Blue Line is the open price for the session.
BL is the difference between the current price and the opening price measured in strikes.
BL +1.80 tells us SPY has moved higher 1.8 strikes from the open.
BL tells us the exact position on the chart and is used for a bullish or bearish bias for the trading session.
The strategy to remember:
ABOVE THE BLUE = BULLISH
BELOW THE BLUE = BEARISH
Because the session open is extremely volatile with price moving in both directions, we typically use the Blue Line ~ 10:30 to try and trade edge alerts that match.
Bullish or Bearish we will try to enter trades and hold them to 3-Strikes above or below the blue.
The average move is 3-strikes. Anything beyond that and you are at risk.
The higher BL = more BULL RISK
The lower BL = more BEAR RISK
This is because the 0dte market is designed to punish and destroy traders who are late to the move and chasing the price action.
We make it very easy for you in the chart.
YELLOW WARNING ZONE
BL +/-5 is the warning zone.
If volume is low, price will likely reverse. This is a good spot to take profit and go to runners (free contracts).
RED DANGER ZONE
BL +/-5 is the danger zone.
Most sessions we do not see 5-strikes, so it's unclear what will happen next. This is a good place to exit any trades you may have purchased in the yellow or look for a reversal.
SPY 10/01/24 we see a move all of the way into the red.
What you'll notice is that we bounce back up into the yellow before hitting 570 (3-strikes) and going back down.
Do not trade BEARS BL -5 or lower.
QQQ 11/01/24 - we see a fast move into the yellow.
But then every time we get into the red, price pulls back to the yellow area.
Do not trade BULLS BL +5 or higher.
When we're above the blue, we're looking for any pullback to trade BULL BOMBS and buy call options.
We are looking to take the position to 3+ strikes.
Look at QQQ from 10/22/24.
10:30 BL +2.03 (high) so we will wait to enter a trade.
12:30 - BULL BOMB with 58% win rate
The trade wins returning over 468% max gain.
When price is above the blue, it will sometimes reverse and pull back to the blue line.
This is often an excellent opportunity to enter call options and we commonly see KTR fills and BULL SWING alerts.
SPY 10/08/24 had two opportunities to buy calls near the blue!
Here's another look at SPY 10/22/24.
We failed to break below and price went up to 3-strikes before pulling back.
When we're below the blue it's time to put the bear suit on and take put options to BL -3 or lower.
Look at QQQ 10/17/24
Below the blue, already in the warning zone for bears. This is risky!
If you waited to take a trade until 12:00, price nukes back down into the yellow returning 100%+.
If price moves down and returns to the Blue Line anything under +1, it's a very bearish setup.
Wall Street just killed everyone who bought puts late and is now going to begin the real move down.
QQQ 10/23/24
Price action chops at the blue before going down 3-strikes and bouncing back.
It never breaks above 494. This is bearish.
KTR hits and it's a 900% max gain option trade.
Occasionally Wall Street will employ their favorite type of price action terrorism where the price will just ping pong back and fourth at the blue line the entire session.
It commonly occurs on event days (intraday market even like Jerome Powell speaking).
Whenever you see this, the bias is neutral.
We want to chase wherever it breaks out, because after hours of ping pong and killing options via theta-decay, there will be a big move.
Price ping pongs at the BL until moving lower. It doesn't break above the blue which is bearish.
This is followed by a massive nuke.
BLUE LINE SUMMARY:
BL is the difference between the spot price and open price.
Above the blue = bullish
Below the blue = bearish
Try to take positions to 3+ strikes in either direction.
