Hey Everyone,
Nice trading day today with the FED announcement!
Today I'll talk about failed auctions. A failed auction is when a market breaks an important level, fails to find buyers or sellers to continue the move, and drops it back into the POC. If that POC is broken, there will usually be a move to the oposite extreme.
Why does a failed auction occur? Well what happens is, when highs or lows are broken, and there is nothing to continue the move, the only thing that can happen is let the market reverse.
3 things intiate that lack of continuation and reversal.
1.Stops getting runned.
2.New longs or shorts coming in on the beginning of the move.
3.Wrong side (if the failed auction broke highs then fell down, those would be longs on the wrong side) covering positions.
This picture shows and example of a failed auction (today).
Thanks,
Julian
