Hey Eric.

Yes, if that level had held for longer then the additional volume traded would be a good sign that considerable demand had come in at that level and following an accumulation process price was more likely to follow through on the move up. I like to see these periods of accumulation/distribution at supply and demand zones if possible but other contextual clues such as false breaks which trap traders (seen later in the day) can be just as good due to the psychological and emotional element they provide.

Thank you for your reply!

Am I correct to understand that in the second scenario in which you would take the trade, It would be because a longer consolidation in the 2853-54 zone would mean the market has accepted that level as a good support level (the sellers couldnt push through while trying, and the buyers held it there.) Which would mean there would be a lot more buying pressure at that level, giving a greater chance for an uptrend/follow through to the upside?

Thanks again!

Hi Eric.

I did consider it. In the end it just didn’t push up quite enough for me to think that the market was ready to turn over immediately, at least from that point.

Two scenarios would have made me enter that trade right away. The first would be if we broke up enough that I could use the prior swing high (resistance) as support at 2857.50. That would have been enough confluence of positive factors to enter at first test. The second scenario would be if price had spent more time and had a longer accumulation stage in the 2853-54 zone as more volume traded there could have made up for the smaller structural break if we didn’t push well above that 2857.50 level.

Worst case had I entered there I would only have been willing to lose a few ticks though so it still would have made for a very good day overall.

Cheers.

Thank you!