Mitigation: why some zones fail on the first touch

[Shadow Trader]

Traders mark a zone and expect a reaction the moment price arrives. Sometimes it works, often it does not, and it is worth understanding why. A zone is mitigated when price returns and trades through enough of it that the original orders have been filled or removed. After mitigation, its usefulness drops sharply. That means the first touch is usually the best touch, and the second or third is lower probability. But there is a subtlety: a first touch that only wicks the edge differs from one that closes through half the zone. I count a zone as consumed once a candle closes beyond its midpoint. I also pay attention to what happened on the way back. If price returned in a violent, impulsive move, that suggests momentum is strong and the zone may be run over. If it drifted in slowly with overlapping candles, a reaction is more plausible. Keep a log of first touch versus later touch results and let your own data decide how much weight to give each.

[FXS HongKong Scalper]

Counting a zone as used once price settles past the middle of the zone is a clean rule. I would add a time element too. A zone that price leaves alone for many sessions tends to weaken, as the orders that created it get cancelled or the participants move on. On M15 I stop trusting a zone after about a week unless the higher timeframe still points to it.