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Question regarding a trading range rejection
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Question regarding a trading range rejection

  #1 (permalink)
Elite Member
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Question regarding a trading range rejection

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.

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  #3 (permalink)
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  #4 (permalink)
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Nashville22 View Post
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

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.

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Nashville22 View Post
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

If you knew a lot of people had stops there, wouldn't you go after them and take them out, buying from them, and then sell on the other end?

Mike

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  #6 (permalink)
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Big Mike View Post
If you knew a lot of people had stops there, wouldn't you go after them and take them out, buying from them, and then sell on the other end?

Mike

The problem with this simple premise If you knew a lot of people had stops there. The reality is we don't know.

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  #7 (permalink)
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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:

A Failed Break of a Range will lead to a Test of the Other Side | Articles-Technical-Analysis

Thanks a bunch Lance

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Great article. Thanks for posting!

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  #9 (permalink)
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Here are some more examples that occured recently on the ES:

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  #10 (permalink)
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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.

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