The Continuation Model

This model exists so you never have to chase or FOMO into a move. Use it after a reversal has begun and you either missed the entry or want to add to the position.

Step by step

1. 01

   Identify a clear external draw

   Use IRL/ERL and HTF models to pinpoint external liquidity targets that have not been reached yet. Non-negotiable. If the original target is already hit, there is no continuation.

2. 02

   Assess trend fluidity

   Is price trending with clear impulses and retracements? Are IRLs being filled cleanly? Choppy overlapping candles are not a continuation, they are consolidation. Stand aside.

3. 03

   Check for FTSH or FTSL

   Does NQ fail to seek highs or lows? Extra confirmation. If price sweeps an IRL in the process, even better.

4. 04

   Apply fair value to premium sequence

   Use the IRL/ERL framework to find where price will retrace and continue. The retracement typically aligns with structure.

5. 05

   Enter at high-probability levels

   Target the retracement. Do not short at liquidity lows or long at liquidity highs. Enter at fair value.

6. 06

   Use HTF for confirmation

   If you see an HTF reversal and zoom into the 1m to 5m and see a continuation model, probability goes way up.

7. 07

   Set the target

   The untaken external draw. Move the stop to breakeven once the first internal level clears, then hold the full position to it.

8. 08

   Use the flip candle

   Add the flip candle for extra confirmation and impulsive entries.

Where it sits in the day

The continuation is the second half of a move that a reversal already started. Marking that on a diagram makes the dependency obvious in a way the rules alone do not.

Notice there are three entries on that leg and they are the same trade taken three times. Price impulses toward the draw, pulls back into the imbalance it left, and continues. Each of those pullbacks is a continuation entry, and each one has the same structural stop logic as the reversal did.

This is also why the continuation is the more forgiving of the two setups. The reversal asks you to be right about a turn. The continuation only asks you to be right that a move already underway is not finished, which the untaken draw is telling you.

What disqualifies it

Step two of the process says assess trend fluidity, which sounds subjective until you see the failure case. This is not a trend with retracements. It is a range, and every entry inside it is a coin flip.

The test is simple. Can you point at a clean impulse and a clean retracement, in that order, more than once? If you are squinting, the answer is no. Overlapping candles with no directional conviction are consolidation, and consolidation resolves in whichever direction it wants.

The other disqualifier is the one from step one. If the original draw has already been reached, there is nothing left to continue toward, and what looks like a continuation entry is usually the start of the reversal against you.

The continuation model lives and dies by your ability to read IRL and ERL. Once you can consistently identify where fair value is and where the external draw sits, your continuation entries almost never fail.

What it looks like on a real chart

One leg, two entries, one draw. This is the chapter's claim that the same trade appears more than once on a single move, shown on a real chart.

NQ1! · 3 minute

Tap to enlarge

1. 1The line marked untaken ERL is the draw — external liquidity sitting above that price has not reached yet. It is the reason the trade exists, and it is the first thing to establish. No untaken draw, no continuation.
2. 2The impulse at 22:15 runs so hard it leaves the lower gap behind it. That imbalance is the first entry, not the impulse itself; chasing the candle is how people end up long at the top of a leg.
3. 3Around 23:15 price retraces into that gap and continues. Same structural stop logic as the reversal: below the gap, and the draw above is still the target.
4. 4The second impulse leaves the upper gap, and price retraces into that one too. Two entries, same leg, same draw, same trade taken twice — which is the whole point of the chapter.
5. 5At 00:15 price reaches the line and turns over. This is the disqualifier arriving: once the draw has been taken there is nothing left to continue toward, and what looks like a third entry is the start of the reversal against you.

Before you move on

• You can state which liquidity a continuation targets, and why
• You would stand aside on an overlapping, choppy chart
• You know why this is never your first trade of the day