The logic of the flip.
When a resistance level is broken, it becomes a new 'floor' (support). When support is broken, it becomes a new 'ceiling' (resistance).
This happens because the collective psychology of market participants changes once a significant price hurdle is cleared.
Step-by-step execution.
- Identify a clear horizontal or trendline level.
- Wait for a high-volume candle to close past the level.
- Watch for price to return to the level on lower volume.
- Enter when price shows rejection (candle pattern) at the level.
Setting your targets.
Targets are usually set at the next major structural level, while stops are placed comfortably on the other side of the 'flipped' level.
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