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Note the lack of follow thru. On a 2 bar reversal you expect to see immediate action. When the next bar didn't show conviction to the upside, the trade could be cut loose.
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Tin,
On your chart here, what is your criteria regarding entries? Im a little mixed up with what constitutes a confirmation signal. If the first bar is on low supply volume and the second bar pierces the upper 2/3rd range, this would indicate a long signal.... so basically the third bar is not necessary for a setup? If so, what makes a no follow through on the third bar a indication of further sell-off? Wouldnt there be cases where the third bar may be enclosed within the range of the second bar but then price lifts? Im trying to figure out when you would cut your position loose, because from my observation in these situations I find it hard to tell and prefer price to let it do its thing or stop me out under the low of the first bar.