Market is a simple auction process.
If an asset is going up, there must be demand in buying these prices.
If an asset is going down, there must be demand in selling these prices.
Failed auction is process where prices is breaking out of a fair value, but it is not accepted by market participants so price is coming back to its fair area of value.
How can you spot that it is not being accepted?
- Look for increase in volume once you breakout, if the volume is not increasing, there is not a demand in trading these prices – asset’s price is not being accepted.