Where to Place Invalidation on Continuation Setups
Every continuation mark needs an invalidation price before you consider entry. Without it, a range breakout becomes guesswork dressed as analysis.
Our first level sits below the consolidation low for long continuations, or above the consolidation high for short continuations. This is the structural fail point: a close beyond it means the range was not a pause but a reversal in progress.
The second level is the prior swing that established the trend. If price breaks the range but also takes out that swing, the continuation narrative is usually finished. Workshop participants write both levels in the workbook margin before discussing entry timing.
We do not teach fixed risk-reward ratios. Instead, we ask whether the distance to invalidation still allows a meaningful continuation target based on the prior leg's length. If the math is tight, the setup is often better left unmarked.
Review your last ten marked consolidations. Count how many times price touched invalidation before resolving. That frequency tells you more about your range drawing than any indicator setting.