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double pressure on the buy side), another bear-flag formed (6-7), but it was a poisonous pattern to be traded for continuation. Of course, with the break below bar 7 far removed from the 25ema, and with the round number here working as an adverse magnet, this was a very easy skip from where we stand. When powerbar 8 flipped the flag break around, setting up the W-middle-part as mentioned, the climate was still very bearish. Moreover, even if the bulls would manage to position themselves firmly on top of the 25ema again, then still the market would be ranging rather than trending. As we know, this always calls for caution. The otherwise attractive long above combi 9 is best declined. Maybe a nimble scalper may have taken a shot at gathering a handful of pip on the way up to the technical test with the low of combi 5 (a likely magnet), but the overall environment clearly lacked a dominant party and that generally rules out 20 pip targets. Also, should prices have stalled on that upside break, we can imagine the bears to have had little trouble testing back the 1.31 round number. As it turned out, bulls remained persistent and they even traded a bearish mini-break at 10 for failure. And within the hour, they pulled a similar trick by trading the box break for failure as well, above bar 1 1 . In a trending market, the latter offer may have been a reasonable option to pursue, but with prices traveling in a range, and in the tricky 50-level area to boot, not to mention the technical resistance of the flag on the left (1-5), trading the break above bar 1 1 cannot be regarded as a high-odds play. At the end of the UK session (which is the start of the US lunch-hour doldrums), the break of bar 12 was a definite skip for three reasons at least: (a) the bear break of the final box had not been proven false; (b) prices resided in the danger zone of the range's highs, and (c) the bull entry suffered high risk of the 50-level adverse magnet. A poisonous offer indeed. 2/7
Understanding Price Action IFig 8.31 www.ProR •• rrime.com eurlusd 5-minut. 89 skip '+.+,�T"O 10 eProReefrrne.com 16;00 18:00 19:00 20:00 21:00 Figure 8.3 Session overview: Whenever we have a one-sided market on our hands, all bets against dominance are basically off. A better idea, on the whole, is to pick up a pullback reversal in the 25ema region. So patience is required. Points of interest: Both the bear break in bar 2 and the one below bar 3 (three-bar combi) were reversal wagers in defiance of a very ex-plicit trend-and arguably deployed at the worst possible moment as well, straight into a trending 25ema. It didn't take long for these eager bears to realize their mistake, nor for savvy bulls to start examining their trade-for-failure options. Depending on one.:s appetite for aggression, there were three bull breaks offered (above the first three arrows), the latter of which was a textbook trade-for-failure entry. The "problem" with the first break, above bar 4, was the fact that the horizontal line below the reversal progression had not yet been broken back. On the other hand, a less