The level every other trader is already watching finally goes, and the stops behind it go with it.
“If you're trading the fourth test of the high or low of day, size down. The odds of a clean break get worse every time the level survives.”Jason Parker · Founder
High of day and low of day aren't technical levels in the textbook sense. They're the price where a lot of stop-losses and a lot of breakout orders already sit. When that level finally gives, the move that follows is often other traders' orders firing, not fresh conviction showing up out of nowhere.
| Entry | On the break candle's close, or the first pullback to the old high or low acting as new support or resistance |
| Exit | Scale out into the next round number or prior swing level, don't wait on a single target |
| Stop | Back below the old high, or above the old low, on the wrong side of the break |
An illustrative example built to show the setup’s shape. Not historical price data, and not tied to any specific ticker.
Late in the day this level gets poked three or four times before it actually goes, and every failed test looks the same as the one that finally breaks, until it doesn't. If you're trading the fourth test of the session, size down. The odds of a clean break get worse each time the level survives.
None of this works without the framework underneath it. Read risk management next, or run your own numbers in the position-size calculator.
Common questions about trading this setup, answered straight.
The setup trades the break of the level where the day's stop-losses and breakout orders are already stacked. Entry comes on the break candle's close, or on the first pullback to the old high or low once it flips to new support or resistance.
The stop sits back below the old high, or above the old low, on the wrong side of the break. Scale the exit out into the next round number or prior swing level instead of waiting on one fixed target.
Late in the session, this level gets tested three or four times before it actually breaks, and every failed test looks identical to the one that finally goes, until it doesn't. Size down on the fourth test of the day, since the odds of a clean break get worse each time the level survives.
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