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Break of structure · retest of the old level · 5-minute

Knock Twice

The first break of an old high is a question, not an answer. The trade is the knock: price comes back, touches the old high once and closes back above it, with the stop a tick under that candle and the break of the new high as the confirmation.

5bars clear before the knock
0.6–3ATR leg
24bars for the new high to break

6 / 6

Watch one long, start to finish

1

Mark the old high

  • A swing high is a bar with 3 lower highs on each side of it. It only counts once the third bar after it has closed.
  • Of the swing highs in the last 48 bars (4 hours on a 5-minute chart), watch the highest one that hasn't already been broken and used.
  • Shorts are the mirror: the lowest unbroken swing low.

The highest recent swing is where the last buyers gave up. If price can get through it and then hold it, the sellers who defended it are gone.

2

The break opens the setup

  • A candle closes at least 1 tick above the old high, after the one before it closed at or below it.
  • Only breaks between 9:35 and 3:30 open a setup. The first five minutes and the last half hour are skipped.
  • This isn't an entry. A break that closes straight back under the level cancels the setup.

Plenty of first breaks close straight back under the level. Waiting to see the level hold from above is what separates a real break from a stop run.

3

Stay away

  • Price makes a new high. It's confirmed once 3 bars after it fail to go higher.
  • Then at least 5 bars in a row have to stay clear of the old high, wicks included. An early touch resets the count.
  • The leg, from the old high to the new one, has to be between 0.6 and 3 times the 14-bar ATR.

A touch right after the break is just the break still chopping. Going away first and then coming back is the second look the setup is named for.

4

The knock: enter on the close back above

  • A candle's range touches the old high.
  • That candle, or the next one, closes back above the old high. That's the knock. Enter at that close.
  • Stop: 1 tick under the knock candle's low, or 1 tick under a line 4 ticks below the old high if that's lower.

The old ceiling just acted as a floor. The stop goes where that read is proven wrong, which is only a few cents away.

5

The new high has to break

  • A close above the new high confirms the break of structure. The indicator marks it with a check.
  • It has to come within 24 bars of the knock. If it doesn't, the setup is off.
  • A close more than 4 ticks back under the old high also ends it.

A level that held on the knock should let price go straight back to the high and through it. If it can't, the buyers who held the level aren't there.

6

T2 is one more leg, risk 1%

  • T2 = the new high plus the leg (new high minus old high). Minus for shorts.
  • Size every trade so the stop costs 1% of the account, then check the share count against your buying power.

A measured move: the leg that broke the old high, repeated from the new one. With the stop this close, T2 is usually several times the risk.

Two ways in, same trade

The indicator alerts on both. Same example as the walkthrough: old high 101.20, new high 101.92, leg 0.72, T2 102.64.

This setup

On the knock
Entry
101.34
Stop
101.11
Risk
0.23
To T2
+1.30 · 5.7R

More of these fail, because the new high hasn't broken yet. When they work, one pays for several stops.

Waiting for proof

On the break of the new high
Entry
102.04
Stop
101.11
Risk
0.93
To T2
+0.60 · 0.6R

Confirmed, but the stop is still under the knock, so T2 is closer than the stop. It needs a high win rate to pay.

What cancels it

Every decision is made on a closed bar, never on a wick or a bar that's still forming.

A close back through the level

More than 4 ticks under the old high (over it, for shorts). Before the knock, the setup is gone. After it, get out on that close if the stop hasn't already filled.

The clock runs out

No close above the new high within 24 bars of the knock, or 120 bars since the break. The idea has gone stale.

A break the other way

A fresh break of a swing low cancels every long setup still open, and the reverse. The old high is also retired once a break above it confirms.

The four filters

Each one removes a retest that looks like the setup but isn't.

1  Five bars clear

After the break, at least 5 bars in a row can't touch the old high. A touch before that resets the count.

Kills: a break that's still chopping around the level.

2  Leg 0.6 to 3 ATR

The move from the old high to the new one is measured in 14-bar ATRs. Under 0.6 is noise. Over 3 is a spike that rarely retests cleanly.

Kills: tiny pokes and blow-off spikes.

3  Close back on the right side

The knock candle, or the one after it, has to close back above the old high. A touch that closes below it isn't a knock.

Kills: retests that are really breakdowns.

4  9:35 to 3:30

New breaks only count inside the session. Setups already open keep running after 3:30.

Kills: the opening print and the closing rush.

Size off the knock, then check buying power

The stop is close, so 1% risk buys a lot of shares. Cap the size at what the account can actually hold.

Account × 1%$50,000 × 1% = $500.00
Entry — the knock's close101.34
Stop — 1 tick under the knock101.11
Risk per share$0.23
$500 ÷ $0.232,173 shares · $220,212
Buying power — 4× day trading$200,000
Position size1,973 shares

The mistake this prevents

Skip the knock, buy the break of the new high at 102.04 and keep the stop under the knock, and $500 ÷ $0.93 says 537 shares.

T2 pays +$322. The stop costs −$500.

Same trade, same stop, same target. Entering late turns a 5.7R idea into a 0.6R one.

Long and short, side by side

The whole rule set on one table. Each row is one condition, and both sides need all of them.

  Longbreak of a swing high Shortbreak of a swing low
Old levelHighest unbroken swing high, last 48 barsLowest unbroken swing low, last 48 bars
BreakA close 1 tick above it, 9:35–3:30A close 1 tick below it, 9:35–3:30
Stay awayNew high confirmed, 5 bars clear, leg 0.6–3 ATRNew low confirmed, 5 bars clear, leg 0.6–3 ATR
KnockTouch, then a close back above the old highTouch, then a close back below the old low
EntryThe knock's closeThe knock's close
Stop1 tick under the lower of the knock low and the level minus 4 ticks1 tick over the higher of the knock high and the level plus 4 ticks
ConfirmationA close above the new high within 24 barsA close below the new low within 24 bars
T2new high + (new high − old high)new low − (old low − new low)
Cancelled byA close 4+ ticks under the old high, 24 bars with no break, or a break of a swing lowA close 4+ ticks over the old low, 24 bars with no break, or a break of a swing high

One Knock Twice, start to finish

An example session drawn by the indicator's own rules: the old high, the break, the new high, the knock and its plan stop, the break of the new high, and T2. The bars are made up to show the setup clearly. They aren't a real ticker.

Loading chart…

5-minute

Indicators for this setup

Add this to a TradingView chart. It finds the old level, tracks every break, marks every touch and the knock that counts, confirms the break with a check, draws T2 and the plan stop, and alerts. It does not place trades.

The first break asks. The knock answers.

Buying the first break of an old high means guessing whether it holds. Waiting for price to leave, come back and hold the level means buying where you're proven wrong a few cents lower, with a whole leg of room above.

  • A touch in the first 5 bars after the break isn't the knock. Let the count reset and wait.
  • A close back through the level ends the idea. That's the exit, not a reason to add.
  • Knocks fail more often than confirmed breaks do. Risk 1% per trade and let the size of T2 do the work.

Rules as coded in the Valid BOS Pullback v2 indicator at its default settings. The walkthrough chart is illustrative, not a real ticker.