Myth: If the price approaches a level repeatedly, and gets rejected from it, this means that the level is very strong.
Reality: After each touch, the level becomes weaker and weaker due to the absorption of the residual orders.
Underlying logic:
1. Whenever the price keeps approaching a certain level, there are pending buy orders which are waiting to be filled.
2. Every time the price comes back to this level, a certain amount of orders gets absorbed.
3. More the price approaches that level, the lesser unfilled order remains.
4. Hence, ultimately all the orders get absorbed and we see a breakout/breakdown of that level.
Disclaimer: This is NOT investment advice. This post is meant for learning purposes only. Invest your capital at your own risk.
Happy learning. Cheers!
@johntradingwick
Reality: After each touch, the level becomes weaker and weaker due to the absorption of the residual orders.
Underlying logic:
1. Whenever the price keeps approaching a certain level, there are pending buy orders which are waiting to be filled.
2. Every time the price comes back to this level, a certain amount of orders gets absorbed.
3. More the price approaches that level, the lesser unfilled order remains.
4. Hence, ultimately all the orders get absorbed and we see a breakout/breakdown of that level.
Disclaimer: This is NOT investment advice. This post is meant for learning purposes only. Invest your capital at your own risk.
Happy learning. Cheers!
@johntradingwick
Rajat Kumar Singh,
B.Tech (Delhi Technological University)
Community Manager (IN), TradingView
✅ Telegram: t.me/johntradingwick
✅ Blog: tradingwick.in/
✅ Rounding Top pattern: tradingwick.in/chart-patterns/rounding-top
B.Tech (Delhi Technological University)
Community Manager (IN), TradingView
✅ Telegram: t.me/johntradingwick
✅ Blog: tradingwick.in/
✅ Rounding Top pattern: tradingwick.in/chart-patterns/rounding-top
