Compression is an indication that price is approaching a significant level that will cause price to react massively .looking at the chart you can see that compression is always followed by a shoot in the market or impulse swing.
The market will always have compression followed by impulse swing .your duty as a trader is to be alert and know what to look for as a reference point for price to give you some nice pips in the market.
KEY TAKEAWAYS ON HOW TO TRADE COMPRESSION:
•When price is moving towards a significant level or institutional level it will most likely to move in compression for smart money accumulation
• The reason price moves in compression is to collect more orders on both sides. then choose direction either sell-side or buy-side direction will be taken.
•After that price will use any institutional reference point to pick a certain direction either buy or sell. This could be your order block ord air value gap being used as a point of reference to change direction.
kindly note that compression is not the same as consolidation. When price consolidates it usually forms equal highs and lows but compression is when price move either up or down but in compression. During compression higher highs and lower lows are formed instead of equal highs and lows.
Compression will always be followed by impulse swing therefore every time you see price going through compression look for any reference point ahead. here is an example below, CP(COMPRESSION) AND ST(SHOT/IMPULSE SWING).for more on how to trade compression kindly follow our news and watch our youtube videos. I hope this made trading compression easy.
I hope this article gave you an understanding of how to trade compression. All the best keep studying.
Check our :
Related Post : Supply and Demand