1 Entry Behavior
When Momentum Failure & Absorption is active, entry is taken only after aggression has clearly failed to produce progress. Execution begins once absorption is holding and price stops responding to continued effort.
The focus is on:
- Aggressive participation failing to extend price
- Absorption holding against repeated pushes
- Price stalling or rejecting after acceleration
Entry is reactive and precise. Execution responds to failure, not to speed.
2 Invalidation and Early Exit
The trade remains active only while the failure thesis remains intact. Invalidation occurs when:
- Acceptance forms beyond the absorption area
- Aggression regains effectiveness through the failure zone
- Price behavior no longer supports the failure explanation
When the failure thesis is no longer valid, the trade is exited immediately.
3 Scratch Discipline
When failure does not lead to reversal, the trade is scratched. A scratch occurs when:
- Price remains stalled without resolving
- Absorption weakens without rejection
- The market re-enters balance near the failure zone
Scratching preserves clarity and prevents overstaying unresolved conditions.
4 Trade Management Posture
When reversal develops, the trade is managed with restraint.
Management prioritizes:
- Staying aligned with the direction of unwind
- Allowing trapped momentum to exit naturally
- Avoiding interference during healthy expansion
The objective is to remain responsive while allowing the unwind to do the work.
5 Re-engagement Logic
Re-entry is permitted only if the failure thesis remains intact and a new absorption event appears. Re-engagement occurs only when:
- Aggression again fails against held liquidity
- Absorption remains intact
- Price rejects from the failure zone
Each entry is independent. Re-engagement follows the same execution behavior as the initial trade.
Closing Note
Momentum Failure & Absorption works because aggression often outruns liquidity. When effort increases but price stops responding, control shifts. Trapped momentum must unwind, and that unwind creates opportunity.
The sequence is clear.
Observe acceleration. Wait for failure. Enter when absorption holds. Exit when the failure thesis runs its course or is no longer valid.
When aggression fails, reversal is the best explanation. When aggression works, the trade no longer exists. Clarity at this stage removes hesitation and supports consistency.