Tuesday 17th January 2012

I've recently had an email request asking me to clarify my use of the term "acceptance" in this previous blog post - http://www.yourtradingcoach.blogspot.com/2011/09/forex-gaps-they-dont-always-close.html

It's not the first time I've been asked about acceptance and rejection, and so given today's brilliant example of rejection I thought I'd share the definitions, at least as I use them.

You'll see the terms used only when discussing a price breakout of an S/R level or a significant swing high or low.

Rejection refers to the fact that price was not able to hold at or beyond the breakout level - or in other words price "rejected" this new side of the breakout level. It will typically be seen via an upper or lower tail, or a rapid two bar reversal (engulfing bar, dark cloud cover etc).

Acceptance is the opposite. Price was able to hold beyond the breakout level - or in other words price "accepted" this new side of the breakout level. Those who know my writing will know that I hate fixed rules, but typically if it's held there for more than 2 bars I'll start to assume acceptance.