3d • General discussion
Failure of Rejection
Before the New York Open, the market had already accepted higher prices and squeezed over 100 points from the overnight lows.
As price approached both London High and the Previous 4H High, higher prices were initially rejected and the market rotated lower.
At first glance, this appeared bearish.
The Information
The rejection itself was not the trade.
The important question was:
Could sellers maintain control after the rejection?
As price rotated lower, the market failed to facilitate continued trade lower and eventually reclaimed the Monthly Open.
This was the first indication that sellers were failing to accomplish their objective.
Opportunity
Long participation was initiated upon the reclaim of Monthly Open.
The trade was not based on the level itself.
The trade was based on the market’s inability to maintain downside control after rejecting higher prices.
Operator Note
A rejection is not information.
The market’s ability to follow through on the rejection is information.
Lesson
Most traders react to rejection.
Operators evaluate whether the rejection is actually accomplishing its objective.
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Failure of Rejection
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