A very simple but powerful principle
that fixes many trading errors.
To keep it simple, use the previous day’s range.
That’s your reference.
As we move into the next day,
the market can only do three things:
1. Break out and continue
2. Break out and fail
3. Stay inside
How to use this?
1. Breakout and continuation
If price breaks out and gets accepted above the level, that’s strength.
We follow the move
towards a full range expansion (1x of the previous day).
2. Breakout and failure
If price breaks out but fails, that’s weakness.
We trade it back
to the other side of the range.
3. Inside range
If price stays inside, there is no edge.
Do nothing.
Apply this across all timeframes
and look for alignment.
That’s how you stay on the right side of momentum.
Simple.
But powerful.
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