Quote:
Originally Posted by UnnamedPlayr |
I would like to submit an alternative view as to why price returned below the breakout, someone with deep pockets has been passively and actively buying for many days, if they can afford this then they probably have no need for placing stops, therefore there are more stop orders connected to short orders in the market. Ever noticed more stops consistently triggered in one direction more than the other ?
So when price breaks resistance the stops start to cascade/domino. Now the Deep Pockets can either do nothing, in which case price will shoot up leaving long candles with high volume but you might be able to notice they are actually not very high volume per each pip of movement.
Or they can control the cascade/domino effect, by either dumping some longs, which is counter productive to their long accumulation, or they could enter new short positions. Both these examples might be seen by similar volume candles to a "do nothing" scenario but they are much shorter in height, so with a high volume to pip ratio, and to profit from these shorts they need to drive price back down below the initial breakout.
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