There are numerous key levels on any chart. For example previous support and resistance levels, pivots, round numbers, fib's. The more important the level the bigger the reaction should be. There are some very good traders out there that can identify and trade these key levels.
I look to exit trades at key levels and then look for a reaction. As an example if a certain price caused a 200 pip move previously and comes back hits and moves 40, hits again and moves 20 (hopefully you've been in all the trades in direction of trend). Those smaller bounces away from the key level are usually pretty good indications that the key level will fail.
Nothing works 100% (as previously mentioned and price will do what it wants) but apart from the hope that we will have been in the moves (trading higher lows and lower highs) to the key levels, we look at the size of bounces. If the bounces are getting smaller we'll look for the right candles to see if that key level will fail.
Higher lows/lower highs from these levels provide opportunities to enter the market at extremes.
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