For this pattern to be valid, the following features need to present:

  • The market forms a compression or a triangle at a KL.
  • It breaks one side of the triangle, hits a KL and then reverses.
  • The trade is a break of the other side of the triangle,
  • As in this case, it’s usually best to wait for a retest of the line and then a rejection as this gives a better entry and prevents whipsawing.
Around 11355, the 169, y’day close, pivot and H4/H1 TLs formed an area of confluence where it first met a lot of sellers; with each restest of the level the sellers were less able to push the market back down and the in the final attempt, it only got to the pivot from where it rejected the upper line a fourth time before punching straight through it.

The trade is best taken in line with the short-term trade, but can also be used counter-short-term trade and with long-term trade, especially if there is plenty of white space above/below the entry.

PA Context

This trade setup during a strong up move in an overall downtrend. The market has broken a KL the day before and maintained gains

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