Price Action

Past

•Supply and Demand

•Support and Resistance
•PAZ - Price Action Zones
•Caps on Price - RBD/DBR *
•Flag Limits - DBD/RBR *
•Fail to Return - FTR

Approach

•Compression *
•3 Drive

Reaction

•Engulf
•Quasimodo *
•Diamond *
•The CanCan *
Abbreviations

Here are some abbreviations that you may find used in the site.

A - as a prefix - Ascending
AA- Adam and Adam
ACH - Ascending Channel
AE - Adam and Eve
AWG - Ascending wedge
BE - Break even
BE - As a prefix - Bearish, example: BEACH - Bearish ascending channel
BEB - Bearish engulfing outside bar
BEFL - Bearflag
BH - Bar highs
BNR - Bump and run
BO - Breakout
BOPA - Breakout, pullback and advance
BOPB - Breakout + pullback
BR - as a prefix - Broadening
BRN - Big round number
BU - As a prefix - Bullish
BUB - Bullish engulfing outside bar
BUFL - Bullflag
CH - Channel
CN - Continuation
CP - Compression
CPLQ - CP followed by Liquidity
CWH - Cup with handle
D - Demand
DBB - Double Bottom
DBD - Drop base drop, descending pole flag pole
DBR - Drop base rally
DBHLC - Double Bar high lower close
DBLHC - Double Bar low higher close
DBT - Double top
D1 - Daily
DD - Drawdown
DM - Diamond

DMA - Direct Market Access

DP - Decision Point
DIV - Divergence
DS - Daily supply
DS - as a prefix- descending
DSCH - Descending channel
DSWG - Descending wedge
DTL - Demand trend line
EA - Eve and Adam
EE - Eve and Eve
EX - Exhaustion
FL - Flag Limit
FL - As Suffix - Flag / Consolidation
FO - Fakeout
FTA - First trouble area
FTB - First time back. Followed by 2TB, 3TB etc.

FTR - Failure to return. Also Hook, Finger

HB - Horn Bottoms
HH - Higher High
HL - Higher Low
HNS - Head and shoulders
HT - Horn tops
HTF - Higher timeframe
HTFL - High and tight flag (amazing results!)
IB - Inside bar
Ib4 - Inside 4 bar that is the smallest bar of the previous 3 bars
ILR - Island reversal
INV - Inverted
LH - Lower High
LL - Lower Low
LTF - Lower timeframe
M1 - 1 minute
M2 and so on
MMD - Measured move down
MMU - Measured move up
MN - Monthly
PA - Price action
PAZ - PA Zone
PB - Pin bar
PFP - Pole, flag, pole
PIE - Price Is Everything thread
PPZ - Price pivot zone
RN - Round number
RBD - Rally base drop
RBR - Rally base rally, ascending pole flag pole
RT - Retrace/Retracement
RTP - Romancing the Price thread
RV - Reversal
S - Supply
Shampoo - see HNS
SL - Stoploss
SR - Support/resistance
SRF - SR Flip
STL - Supply trend line
TG - Target
TL - Trend line
TP - Take profit
TPP - Take partial profit
TR - Triangle
TT - Touch trade
TWB - Tweezer bottoms
TWT - Tweezer tops
W1 - Weekly
WD - Weekly Demand
WG - Wedge
WRB - Wide Range Bar
Price Reading

In order to be able to trade the markets, we need to be able to understand why price is where it is, and where it will go to next. The
best indicator for all this is Price itself. It holds all the clues you'll ever need to work the market out. We do our trading at levels called
Supply and Demand Zones (Video), and we watch Price Action there to give us signs as to the intentions of the big money.

Here’s what we look for on the charts:

General: HTF. Know where price is coming from and going to, and the PA past and present in all the TFs, from the Monthly down.

Specific: At the zones you want to trade, look to

Past. study the zone in all TFs, down to M1

ask yourself
Where were the decisions made? Clean S/D? Mark these lines. No clean S/D? – compressed zone
Did price really shoot away form the zone, or did it cp away?
Did the zone itself react at the right place? Look beyond the zone further into the past. See what it reacted to. Was there a better S/D
nearby that price wants to visit? This explains many fakeouts. Did price originally react to the RS of a Flag Limit? It can fakeout to
true SD of the FL.

Present.
Approach.
How is price returning to the zone?
Where’s the nearest flag in the TF you want to trade? This is your tg1 in this TF. Flags in the LTFs? What does PA tell you?
Has price tested the last flag on approach? (good sign)
Has price compressed into the zone in this TF or LTFs? (good sign)
Is there big news on the way? Has there just been big news?

Reaction
In LTF, does price react violently to the first decision point? Does it quickly engulf the nearest S/D? (good sign)
Does price simply CP away? Maybe it wants to go to the next decision point
If the first decision point breaks, watch the signs on approach to the next, and, of course, reaction.

Chew this over for now. Apply it to your chart history. Apply it to as many failed setups as successful ones. Millions of them if
possible! Capture and file them all. This will help make it instinctive

Supply & Demand

What is Supply and Demand trading?

Goods are bought and sold at what their perceived value is at the time. The same applies for financial instruments, with the
expectation that their price will change in the future and will be bought or sold at differing prices, potentially bringing a profit for
traders.

Prices adjust according to willing buyers and sellers, in-turn creating supply and demand zones, the sellers represent the amount that is
available for sale (supply) while buyers represent the amount available to be bought (demand). It is when there is an imbalance
between buyers and sellers that we see a change in price, for example, when there are more willing sellers, price will begin to fall until
it finds more buyers and when there are more willing buyers, price will rise until it finds more sellers. Knowing where these areas are
on a price chart will give you an edge, and allow you to follow the interests of big/smart money, the real market movers.
Identifying Supply/Demand zones

First we look at the chart for an area where price strongly shot up from (demand) or dropped away from (supply).
The next step is to mark the base of these moves.

We always mark the outermost limit of a move, marking the inner is a personal preference for each of us depending how loose or tight
one wants to keep their zones.
RBD DBR and RBR DBD

As price moves it creates (swing) highs and lows, the extremes of these moves can be marked as “bases”, just like the ones marked
above. When bases are created after a “rally” or a “drop” they form a Rally-Base-Drop (RBD) or a Drop-Base-Rally (DBR).

Let’s mark some on a chart.

Price can also create small bases along a rally or a drop, these smaller moves are known as Drop-Base-Drops (DBD) and Rally-Base-
Rallies (RBR).
Let’s find some on a chart.

Balance vs. Imbalance

During the formation of a base, we consider price to be in balance. This is because there is not a significant difference in the amount
of buy or sell orders in this area thus price doesn’t rally or drop as long as this balance exists. For price to start moving in a direction
there needs to be more of one type of order (buys or sells) than the other causing price to rally or to drop, it is at this point a base is
confirmed and a decision that price was either too cheap or too expensive has been made. When price moves away from a base there
are naturally unfilled orders which remain, so when price returns to the base in the future we can expect the remaining orders to be
triggered causing a reaction in price. It is this what supply/demand traders try and take advantage of.
When Supply/Demand breaks

After a level is tested many times or during a strong move, Supply and Demand levels eventually break. This can be due to the once
remaining orders being triggered and gradually removed, or an overwhelming amount of orders in the opposite direction breaking the
level. Orders can even be removed manually by a trader who formed the level.

Every broken supply/demand level holds some significance. Where once were more sell orders (supply) now more buy orders
remain/exist, with the opposite applying for demand levels. This means upon return to a broken level, we could see a reaction in price,
these levels are often referred to as “swap” levels.

It is at these levels where we can look for conformation to take a trade. This is how the look on a chart:
Part 2: Supply and Demand as reactions to the FTR

Wouldn’t it be nice if we were able to trade supply/demand levels knowing when one will hold or when one will break? Well believe
it or not we can, because as hard as it may sound supply/demand levels are NOT created equally! There are some that are much more
important than others, and some even further beyond important. Most articles on supply/demand will mostly have you read about
“reactions” to levels, because that is what is important right? Sure, they are important if all you want to do is look at the far right of
your charts and gamble, but what are the supply/demand levels themselves reactions to?

Hopefully we have pricked your attention, because this is going to be the first time something as important as this will be covered in a
supply/demand article and it is very exciting to be writing about. I can already hear you all screaming; hold on! Supply/demand levels
can be reactions to other supply/demand levels! Or Support/Resistance levels! Or MA’s and fibs! Please…If you are still using MA’s
and fibs, let me direct you to our technical analysis article.
The truth is; supply/demand are often reactions to the Flag Limit (a RBD or DBR after a break of a high or low). You can read about
the FL here. It is these levels that are the important ones, the ones that will contain price in a range, and give you the heads up when
price is going to change direction. Sure there are other areas and reasons supply/demand forms, just like the ones you yelled at me
earlier, but these are lesser important levels, ones that are much more subjected to breaks and fake moves! Knowing the important
ones will keep you on the right side of the market at all times.

Here is some help on defining these levels, but remember, to truly understand them you need to find and mark them out for
yourselves!
There are plenty of other supply/demand levels which I did not mark, but they would all hold lesser importance than the ones formed
after the breaks of highs or low. However, important levels can also break so it is important to monitor these levels for signs of
reversals. When they break however, they hold a lot of importance.

You can see from the image above I marked a DBR after a break of the highs to the left of it. This is a level that forms after a break of
a high, it’s a FTR, and we can expect it to bounce price, but it doesn’t, it breaks. The FTR that proceeds is the RBD that is the
important one, this is where we want to keenly look for PA.
How to trade Supply and Demand Areas

Conventional supply and demand trading teaches the game of probabilities; by trading enough zones, with a decent enough RR, one
should make money. These levels are in general blindly traded with a stop just above, and a target at the next level, this is very often
done with limit orders, longing there is a decent enough RR (2:1 is usually good enough).

If a proper plan is in place, this method will make you money, but it is still essentially gambling, and here at RTM we don’t gamble.
We want to be absolutely sure a level is going to hold, and once we know, we want the very best RR on every trade we take (yes 15:1
can be more common than you think!). By looking for PA in the correct spots, there is no reason you shouldn’t be able to get into
great trades, with great rewards and very little risk. You can find everything you need to know about PAin the markepedia section. So
get to work, log your progress in the homework section and join our great community.

By Harry & Pedini

Support and Ressitance

What is Support and Resistance?

As price moves it creates highs and lows, these often provide “support” or “resistance” when price returns. This happens because more
orders of one kind are in that area (buy or sells). When no more orders remain in these places, price will go through and we say that
the support/resistance level “breaks”.

This is essential for price to move, otherwise it would be trapped inside a range forever. So support and resistance is important as is its
breaks.

But first let’s see what it looks like.

It is a common misconception that the more times price bounces off Support or Resistance then the stronger that level is. Every time
price bounces off them a decision is made on price value (if price is cheap or expensive). But as we said price bounces off these places
because one type of orders (buys or sells) are more than the other. Each time price visits, it consumes orders. At some point price will
go through as there will be no more opposing orders there any more and this is what makes a Support or Resistance level to break.

In a similar way we could draw some more SR lines on that same image.
It is very common for price to break Support and Resistance levels, old highs and lows break as the orders get depleted from them and
price moves through. Broken S/R areas will often react on return as now more orders of the opposite kind remain unfilled in these
places.
How to find S/R levels?

A common practice is to zoom out like in the chart below so you have a wider picture of the area you look at. Then look for places
that price bounced off and mark it with a horizontal line. See how price often respects these lines, then breaks them and when price
returns they often get respected again. Support becomes resistance and the opposite.

Of course you will see many times price breaking through and then reversing, often this is called a false break (false breakout, or
fakeout are some other names commonly used). The simple reason this happens is because price looks for liquidity and this often
happens in these places as traders trade these breakouts from S/R and get trapped, having their stops hit as price “fakes” and moves in
the other direction.
Price Action Zones – The last piece of the puzzle

Every candle on the chart is part of a PAZ of one form or another and knowing where price is in relation to these zones gives us a
massive edge on the markets. Up until now, we have been taught nearly everything we need to know to be successful traders, PAZs
really are the last piece of the puzzle.

So let’s get started!

So what is a Price Action Zone? A PAZ is exactly what it says; it’s a zone on your charts that show a distinct type of Price Action!
These distinct zones include poles, flags, stacked supply/demand and compression. Once we are able to accurately determine where
these zones are, there is one rule. ONLY trade the edges!

One great type of PAZ is the space between two Failure to returns’ (FTR), which is the space in which a flag forms; let’s look into this
a little further:
 You can see in the above chart I have marked off 8 FTR’s as price climbed up, between each one of these FTR we have a PAZ. So we
have 7 PAZs. Simple as. Once price breaks into a PAZ (engulfs a FTR) we know it wants to go to the other side of the zone (the next
FTR). So let’s look what happens on the way back down.

$1• FTR 8 gets engulfed, price has now gotten into PAZ 1. Price retraces then goes to FTR 7

$1• FTR 7 gets engulfed, price has now gotten into PAZ 2. Price retraces then goes to FTR 6

$1• FTR 6 gets engulfed, price has now gotten into PAZ 3. Price retraces then goes to FTR 5
$1• FTR 5 eventually gets engulfed and gets into PAZ 4 and follows through to engulf FTR 4 and FTR 3 and gets into PAZ 6. Price
retraces before going to FTR 2

$1• FTR 2 gets engulfed (see insert 2). Price retraces then goes to FTR 1

Now that you know where price wants to go, it is your job to enter on a retrace to target the other side of the PAZ (the next FTR), and
we already know how to do this don’t we? PA!
Caps - RBD/DBR

When price makes a rally with a strong pole up (this whole lesson works vice versa for poles etc down), there's sure to be some profit
taking by the institutions, allowing price to drop back into the pole.

Price will very often flag at the top of the pole, as the institutions either begin to add long positions to take price higher, or begin to
hide short positions to turn price.

To understand the break of a flag, be aware of Order Flow and Liquidity gaps
This article deals with the latter scenario; price rising (rally), flagging (base), and then dropping (drop!)

The flag was a way for the institutions to keep retail traders buying in the expectation of an advance in price, giving them lots of
orders to sell against.
Seen in a slightly higher timeframe, this is a very uniform cap on price, and in every TF there's a really strong pole moving down from
it
The cap price is obviously way too high, so when price returns to it, the sellers are waiting.

There are often other signs that a cap will hold, such as the engulf in the chart above, or compression on approach

Caps are simply excellent places to look for price to turn!

Here's a video on Price Caps

http://youtu.be/469ZS2YxjhE

Homework:

Mark at least 200 caps on your charts - there are so many to see that it won't take long.

Draw a box from the cap to where price hit it later. Note how price approached the caps, and how it reacted. If price broke the cap,
note what happened next. Was the cap still relevant?
Flag Limits

Price spends more time in consolidation ranges than moving and trending.

Until recently i would wait 'til price breaks out of these ranges and i would wait for a retest of the break.

But these ranges are tradeable, so why not benefit?

A few months back Ifmyante posted an image of a BEFL and he said price should bounce at this area and he pointed at a DBD hiccup
in the way down.

I said i have noticed a lot of these and asked what is the name, he said "we don’t have a name for it, just a decision point".

I told him "i think i found me some new homework, i'll go find many examples of it and report back."

I guess this is it now.

So here is a short article of what is a "Flag Limit" since it is widely used lately. It should help avoid confusion.

As Ifmyante said a while back : "If there's an area of indecision, it manifests itself as a flag. The limits of this flag then become the
new zones."

He also said that "the Flag Limit represents the end of the momentum".

All credit goes to him, for bringing it to my attention.

Below are some graphic representations to simplify things before we go on real examples.
and some real examples follow
Some of course are more messy than others, the trick here is to take the best shaped and clear ones.

The whole Flag area has a lot more plays than the FTB alone.

Its your job, if you like, to take this basic setup and expand on it.
I don’t list any other plays here because it will only confuse you for now and miss the basic point.

Discussion will continue in your blogs, if you have questions post in the school room.

Best of luck to everyone.

by Harry

Homework:

Find and chart 20 flag limits that bounced price on return

Find and chart 20 flag limits that bounced price on susequent returns - note the PA

Find and chart 20 flag limits that failed to hold price on first or subsequent return - note the PA, and where price then went
FTR

1. Introduction

Before solving the puzzle of price action and before being able to read it successfully, one must discover and understand the individual
pieces the puzzle is made of. After all, every eye-catching building is made of individual bricks and stones. For most of us at RTM,
the beauty of price action is just as stunning a structure as the cathedral of Chartres or Sagrada Familia in Barcelona. The only
difference is that bricks and stones of real buildings are represented by price caps, FTRs, engulfs, fakeouts, quasimodos, diamonds etc.
Of the building blocks of the price structure nothing is more important than engulfs and FTRs!

In my article I am going to explain one of the two most important pieces of price action – FTR. Together we will explore what is looks
like, where it can be found and what is its role in the structure of price action.

FTR must be learned properly before one can advance further. Please take your time, don’t rush; learning price action is an amazing
journey, so enjoy it.

2. What is FTR?

So, what actually is FTR? FTR means ‘Failure to Return’. But wait… Who wants to return? Where do they want to return? And why
on earth do they fail?

These three important questions must be answered, so let’s do it.

It’s a well known fact that price, once it reaches a certain barrier, either bounces of it or breaks it. Once it breaks it, two possible
scenarios occur: it either returns back below/above the barrier and goes on in the direction against the break or fails to return and
keeps going in the direction of the break. In the latter scenario, a FTR is made. ALWAYS! And it is of vital importance to be able to
identify it!

Why? Well, there is such a strong buying or selling pressure aka supply / demand at the FTR that the price just cannot return, it must
go on in the direction of the break.

Hint 1: the selling / buying pressure always remains at FTR after price has left. Can you see the implication? J
Now let’s take a look at the anatomy of FTRs.

In the following picture you can see a diagram showing some basic variations of FTRs. Look at them carefully, you will see that they
may look a bit different but remember: they are absolutely the same in terms of the structure.
The red line (a) represents a barrier. It can be a SUPPORT / RESISTANCE, a FTR in opposite direction (will be explained later) or
limit of a PAZ (Price Action Zone).

Price action breaks the barrier (1) and retraces (2). It is irrelevant whether price action crosses the barrier again or not (as in examples
(ii and iv above). At the extreme of the retrace a base is very often made (b).

Then, price action continues in the direction of the break (3). FTR is confirmed after price action breaks the high / low (c) which
formed after the break of the barrier. Only after the break of (c) we can say that price action indeed failed to return.

Now, when the FTR is confirmed, we draw a rectangle at the base (b) and protract it to the right.

Hint 2: for information how to draw the blue rectangles see the article Caps on Price at RTM Marketpedia.
Now that we have studied the diagrams above, we can look at real life examples of FTRs.
3. FTR after the break of SUPPORT / RESISTANCE

FTRs after the break of support / resistance are very common. They are simply everywhere in the chart and you will learn to spot
them.

You certainly know that there are major support resistance lines as well as minor ones… the more important the S/R line is, the more
significance we must assign to the FTR that follows.

Major S/R line

Ok, let’s start with the major ones. I assume that you already know how to distinguish a major SR from minor SR...

In the following chart you can see the brown RESISTANCE line. The RESISTANCE is a major one, it has been respected many times
in the past (not just those two touches seen in the picture). Suddenly, the R line is broken. Is it just a fakeout or genuine break? How
will we know it? Yes, right! We will wait for a FTR to be formed.

And voila, a spectacular FTR is made! The price then rushes away from the R line. Now it’s going to be interesting! Such FTR is an
amazing place to trade on the first visit. The first visit occurred in approximately one week. And look at the reaction! The first visit to
an FTR is called FTB (First Time Back).
Hint 3: Upon return to the FTR the price is falling in a free fall, everyone is happily jumping into trend because “it’s going to go on
and on…” but beware, predators are patiently waiting in FTR level, and so should you…!

For your convenience, there are two more examples:

Now open your trading platform or Forex Tester and see for yourself how often this works!

Minor S/R line

It’s important to know that the FTRs in the above three charts are actually not the only FTRs that can be spotted. Far from it! Every
time price breaks a minor support/resistance, fails to return and goes on, a new FTR is made!
In real life, however, the chart seldom looks so neat and clean as in the above diagram. In the following chart you can see the above
principle in a real chart (in a down trend).
Please take your time and study the above chart, you may notice that I haven’t marked absolutely ALL FTRs because the chart would
be very messy.

Open a chart in your platform and mark all FTRs. Practise! Mark a swing high/low, find where it was engulfed, then find the FTR.
Repeat with next high/low.

Remember, the purpose of the article is not to tell you that each and every FTR is tradable but to teach you how to spot FTRs and how
to mark them. Let me repeat: it is of paramount importance!
4. FTR after the break of a FTR in opposite direction

FTRs are formed after engulfing of a barrier. We already know this. One of such barriers is an FTR in opposite direction. Look at the
diagram below, I think it is self-explanatory.

FTR d is engulfed and FTR 1 is made, and so on.

And a real life example.
Hint 4: FTR 1 is a great confirmation of a reversal. For more information on this see my journal starting with post 304 on page 13
(sweet FTRs).

5. FTR after the break of a PAZ limit

The limit of a PAZ is another barrier, the break of which results in extremely important FTRs! This is, however, rather advanced and it
goes beyond the scope of this article on the FTR basics.
6. Conclusion

In my article I tried to introduce a very important building block of price structure – FTR. We have learned that FTRs are formed after
the break of a price barrier. It is important to realise that FTRs are places where institutional traders open / close their positions. This
makes them ideal places for looking for trade setups or targets.

However, it must be stressed that FTRs on their own are not enough for trading, one must master other important building blocks,
engulfing being the most important one.

Les_Paul
Compression

Touch trading a Supply/Demand zone can be a very daunting prospect, as price doesn't always react as we'd like it to.

But, we're very often shown that the big money is getting ready to turn price at the next zone.

As price is rising, they sart selling down to pockets of demand on the way, consuming the orders, so that when they put their big
orders in at Supply, all those buy orders are gone and price can slide through to the origin of the compression or beyond.

It's exectly the same principle for price compressing down to Demand
 In the example below, price compresses up to a certain point, above which there is no Supply left before the origin, so it shoots up to
there before

reversing and cutting through the CP. THis is called Compression and Liquidity (CPLQ)
Here is a video about Compression by Ifmyante

http://youtu.be/bOhGwkXMG1k
3 Drive

The 3Drive onto S/D can be a strong indication that price will turn.

It shows that price advances are slowing down, while compressing up/down, taking out orders as it goes.
Engulf

If you're not one to simply trade on the touch of a zone, but would rather wait for confirmation that price has rejected, there are some
brilliant PA patterns you can look for before you enter a trade.

The best ones we'll cover involve an Engulf

Simply put, an engulf involves price making a lower low on reaction to Supply, or higher high from Demand

This is a very powerful sign that price is on the turn. They say that a trend is a succession of LL's and HH's, or vice versa, so if you
get a Lower Low from Supply, it's a great first sign that the uptrend may be over, and of course flip the scenario for an HH from
Demand.
If you didn't have the patience to wait for that engulf, see the Lower timeframe for another lovely engulf showing the way much
earlier!

Can you trade an engulf as a breakout trade?

Well, yes, but price very often retraces after the engulf, to confuse the breakout traders and hit their stop losses, creating more
orders to take the other side of the big money's new direction trades.

This means that the stop loss would, in most cases, still need to be beyond the original zone.
Two of our favourite Price Action structures based on the engulf are the Quasimodo and the Diamond
Quasimodo

The Quasimodo is a beautiful and powerful Price Action structure.

It gives a big sign that the big money is ready to change price direction. It often serves to trick the uninitiated into giving up good
positions to them, allowing them to get big orders filled.

We look for them at areas of Supply and Demand, where we look for all our trades, and use them as confirmation that price has
turned, due to the engulf that occurs in their formation
A QM doesn't need to form all at once either
Here's a video of one which took many months to form - it was also one of my favourite trades ever

http://youtu.be/JufS5cKBVng
Homework:

Find at least 60 QMs through history and file them. Mark the zones they're reacting to, and where price went to next.

They can be in any TF, any pair. Find ones that worked, and ones that failed. You'll learn from both
The Diamond

The diamond is one of the most deceptive price structures there is in the market.

It catches both buyers and sellers alike, and can fill massive orders for the big guys.

At Supply, it involves an engulf South, fakeout North, and reversal South - vice versa at Demand

Since a picture tells a thousand words, here are some charts

 This is one reason why you should know exactly where to place your stops, and have the faith in the zone to leave your stops
there

Homework:

Find and describe at least 40 diamonds at Supply or Demand

Any pair, any tf

The CanCan

Very often price will move into, or even better, break out of a zone with strong momentum, creating a pole.

Usually a pole will have a flag on top, gathering orders for price to avance.

But if the flag breaks back into the pole, this is a significant turn in value.

A CanCan can often occur at such an event.

Price moves hard, flags briefly, and moves back quickly with a Liquidity Spike. This liquidity spike will mean there may very well be
orders left to be filled at the edge of the flag, so you'll very often see Compression back towards it, with extra orders being hidden, so
that when price hits the cap, it can shoot back through the compression and on to the base of the pole.

Here's an example
and another

and here's why it's called a cancan. Thanks Henri

Homework:

Find and describe at least 20 cancans throughout history. Any pair, any timeframe