DislikedThis is an excellent explanation of when a supply or demand level becomes invalid. Once a solid green or red candle breaks through and closes above or below the tested level, it is invalid. This is because all orders that were left at that level have been absorbed, thus the solid candle and close above.
What I don't understand is how to define a supply or demand level before the fact. Before it is tested or broken through, what criteria do you take into consideration before confidently saying, "This is a supply/demand level and we should...Ignored
Well in my opinion the best demand and supply levels are those that dont have been tested at least once so far. Untested demand / supply levels should always offer us a opportunity to trade cheap since there should be a lot of orders left. Also we can rate the value and poweer of a possible supply/demand level by checking how quick and straight price reversed from the very certain ones.
Example below :
Hero calls followed by margin calls...