Master the "Stored Energy." Learn to identify market compression—where price constantly tests a level—and trade the eventual, high-conviction breakout.
Compression is a pattern where the price repeatedly tests a specific support or resistance level, but each "bounce" is smaller than the last. Imagine a spring being coiled tighter and tighter; eventually, the energy must be released. A compression breakout happens when price finally punches through the level it was testing, releasing that accumulated energy in a powerful, high-conviction move.
Similar, but different. Compression focuses on the *repetitive testing of a single level*, whereas a triangle is about two converging lines. Compression is generally a higher-conviction signal because the level has been tested so many times.
Every time the price hits the level, retail traders place stop-losses there. By testing it repeatedly, the market "gathers" all those stop-loss orders. When the price finally breaks, it doesn't just break due to new interest—it breaks due to the forced execution of all those clustered stop-losses.