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I'm curious why when a trading range is viloated, then rejected and comes back into acceptance (or previous range) does it usually go to the extreme other side of the range? Just curious what would be the thinking behind what is going on behind that action.
Attached example.
Thank you
Can you help answer these questions from other members on NexusFi?
That's a very good question not to say a tough one Nevertheless i am sure it has to do with supply/demand or the dual auction process. I do shoot for the other extreme as noted but i think i do it more because this is what i have been thought to expect. It happens very often with the globex high/low as well as with the initial balance period (range created during the 1st hour of trading). If price fails on one side i shoot for the other extreme. Just like you i wonder if it is not just a form of self-fulfilling prophecy at work. All market profilers are thought to expect such behavior. I hope a good market profiler theoretician will come to our rescue.
I submitted your question to Lance Begg at yourtradingcourse as i felt he might help to answer it in a deeper manner than i could. And he did bite and as consequence he wrote this interesting article:
Those are good examples. I think it is compilation of a few things. Not only a stop loss run, but traders jumping in with conviction to go the other way after the rejection.