Range rejection is an important factor in determining the Failure of an Auction. Auction failures can happen in all timeframes and in many different ways. Range rejection is also a kind of Auction Failure.
In the chart below, we can see how a large trading range was established for 21 sessions. The auction broke out of that range to the upside and came back into the range and immediately got rejected. This is also an example of the rejection of the Initial Balance range. Initial Balance was formed in Period A-B and C period broke out above the initial balance range. D period tried to push into the A-B period range but initiative buyers lifted it up, away from the Initial Balance.
The above chart serves as an example for the Long Term daily Range Rejection as well as Initial Balance Range rejection. Though, Range Rejections can happen in all timeframes. We can plot a 5-minute candlestick chart and in that if we see the auction creating a trading range and if it breaks out and rejects while coming back in then its meant to be a Range Rejection in that particular timeframe.
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