The Pre-Break High

Using Swing Highs and Swing Lows to Trade Against

First one out on the subject of position management.

“Price tends to react from the last pre-break high.” - basic support/resistance flipping in terms of price action.

In the previous instruction, we had a first look at exhaustion candles.

An initial break out is always volatile and when buying exhausts it will finds a local high. This is called a pre-break high. The break out confirms when price finds acceptance above an old swing high, after which it has to start making higher lows and higher highs to confirm a trend.

We had a look at boxes and bull/bear lines in the previous instruction. Now let’s have a look at the concept of pre-break highs.

In this example, price formed a DEM and breaks out inside the structure. Technically, price could be looking for a bearish lower high and revisit support.