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As we can see, today's price bar (the last bar on the chart) took out the high of three days ago (an inside bar), and the high of two days ago.

That meets with the plan and fits within the parameters of our trading signals.

The high three days ago was lower than the high two days ago. After the first big swing in prices V (vee shape) on the five minute chart, prices settled into a tight congestion (#1) on the following page.

A buy order was definitely in order for a breakout of the high of three days ago (box #1).

Beyond the entry would come proper trade management. An exit should be made upon seeing a bar that makes a lower low or upon seeing two reversal bars, in this case any two bars in a series of bars having a close lower than the open.

If need be, the trade is entered again because the prospect of a violation of the two highs is the driving force behind the trade.

Interesting are the two boxes marked on the chart. The first one represents a breakout of the high of 3 days ago.

The two highs

The second is a breakout of the high of 2 days ago. Both are congestions just prior to an intermediate event.

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