Why Your Continuations Fail (Order Blocks + CISD Explained)

How's it going everyone? In this video we are going to talk about why your continuations are failing.

We will walk through a few different scenarios of why continuations fail, how to correct those, and what to watch out for.

So let's get into the PDF. Now the first thing you need to understand when looking for a continuation is what is the ideal scenario that you are looking for?

What do you want to see on the charts when seeking an entry? Now ideally we want to see a nice aggressive V-shaped reversal.

So when price reaches into a fair value gap or sweeps out a low,

we have a nice V-shape or quick recovery back up into the range, closing through the series of downclosed candles, and vice versa for the bearish scenario.

This aggressive recovery or swift price action through the opening price shows us that price has the intent to move higher.

This is a continuation that we can trust to trade higher. Now let's get into the first scenario on why your continuation is failing.

When price doesn't get that nice v-shape recovery and close over the series of downclosed candles or fails to change the state of delivery, that is when price is forming a consolidation.

Then price will go ahead and close over that level, but what happens? It fails. Now why does it fail?

Well when you take a look this is actually a consolidation and this closure through which you think is validating this low is actually a manipulation of this consolidation range and then it looks to trade to the other side.

So how can we look to avoid this scenario in our trading?

Well when we see that price is failing to form that ideal continuation and consolidating when price closes over we want to wait to see what happens next.

Do we have price form a new continuation off of that high or essentially breaking out of the range?

Or does it fail and go back across the range? So step one is to wait to see this next candle and how it reacts.

Does it form a new continuation, in which case I can trade that higher? Or does it fail and go across the range?

If it fails and goes across the range, well, then I can look to trade this swing point off of this low as we are manipulating the lows to go higher.

So now that we have covered reason number one, what is reason number two?

Reason number two is the continuation forms at the same time that we are taking out highs in a range, or a short-term target is taken.

So here you can see we have a sweep of a low, we have a nice closure through the series of downclosed candles sweeping out that low, forming a continuation or a protected swing,

but at the same time we are sweeping out the highs. This can a lot of times cause price to form a reversal or a new phase of price and then go run out your stop loss.

So similarly to scenario number one or reason number one, what are we going to wait for?

We're just going to wait for extra confirmation, another continuation.

After taking out this short-term high, do we form a continuation respecting this fair value gap or the opposing candles?

Here we do, and we can trade that higher. Here you can see we do not respect those opposing candles and we run out the low.

If I am still bullish, well then I'm just going to use this as my new point of interest, as this is a consolidation range.

We've taken out the highs, we've taken out the lows. Once we form a nice V-shape recovery and an ideal continuation, then I can look to get on side with it.

Now what is reason number three? Reason number three is a higher time frame target has already been taken.

So let's say for instance we have previous day's highs lined up here as failure swings.

We go ahead and we run into that higher time frame target. There are a lot of people that feel FOMO from missing this move.

they go ahead and see a new continuation and then they look to enter it and they get stopped out.

Now you have to realize when we hit a higher time frame target that is when we can form a new phase of price.

So you can see here not only are we at a higher time frame target we're forming that continuation while taking out a previous high and this is actually setting up a bearish change in the state of delivery.

So I simply just want to avoid this scenario realize that you are going to miss some moves and it's not the end of the world live to trade another day.

So those are the three different scenarios on why your continuations are failing.

Let's get into trading view and we'll go over a few examples of these.

So here we are in trading view and let's first look at what an ideal continuation looks like.

Now ideally we're going to have it where we have a point of interest, a reach into that point of interest, a nice v-shape recovery, and quickly closing over those down close or up close candles.

So if you notice here we have a nice leg up, right, expansion, and then we are looking to see if we get a retracement, a reversal,

or a consolidation. And here you can see we have a move lower. So is this a reversal or a retracement?

Well, we get told that by this next candle. And this is ideally what you want to see out of a continuation or the formation of a retracement.

We have a reach into that fair value gap or that point of interest, and we have a nice V-shaped recovery closing over those downclose candles.

What does that do? That then protects this low right here. And we can anticipate if price is going to continue this trend, it should go higher.