Disliked{quote} Hey Ghous, I am trading cotton as a continuation setup. i.e. I waited for price to close below the LLS on the weekly. After that there is a failed attempt to rally. If the IPB would have closed below the low of the previous bar, it would have been a logical entry point. \"prior swing low is massive\" - Are you suggesting that the probability of price continuing from major swing lows/highs is less than then the probability of price reversing and hence continuation setups are riskier than reversal setups? NeytiriIgnored
Now if price had started to consolidate and squeeze as well as drag its way to the swing low, then that's a sign that price is taking a breather before it bursts past that swing low and continues on with the trend. Think about it this way. Knowing that swing points attract major order flow, what's the worst place to get into a short trade in the period between points A and B (refer to chart below)? Right at the swing low, where you know the buyers will be waiting to consume the liquidity and unload their longs. Thinking from the bullish perspective, what better than being able to go long at support and unload massive volumes because there's massive selling going on from poorly informed traders who are overly enthusiastic about the continuation of the down trend and the break of the swing point.
Now again, if we had more story to this, such as some real congestion and a breakout play, then things would have been different and more in favor of a short scenario. Since you were around with me on the other thread, you would know how shorting into major swing lows, with limited information and when price literally accelerates into the level can be so harmful.
here are some charts:
g.
I believe . . .