Failed Auctions
Use rejection at extremes to frame high-quality reversal trades.
A failed auction happens when price tests beyond an extreme but cannot attract enough participation to continue. It may trade above a prior high or below a prior low, then quickly return back into the prior range.
The failure suggests the market searched for business at that price and rejected it. Traders who entered on the breakout may be trapped, and the move back into range can create a reversal opportunity toward the opposite side or value area.
A failed auction needs confirmation. Look for rejection, re-entry, and inability to reclaim the failed extreme. The invalidation is usually clear: if price returns beyond the auction extreme and accepts there, the failure thesis is wrong.