How Price Reacts at Rejection Levels
Rejection at a heavy level is the mechanism behind every stepped trend, and understanding rejection explains why price advances in stages rather than in a straight line.
Why does price reject at a large value cell?
A large value cell represents a concentration of dealer hedging obligation at that strike. Price arriving there meets hedging flow sized to that concentration, which pushes back hardest on first contact before the level has absorbed any of the incoming order flow.
How does rejection create a trend?
A trend is a sequence of rejections rather than a smooth move. Price advances, meets a level, pulls back, advances again past that level, meets the next level, and repeats. The stepped pattern is the footprint of hedging being absorbed level by level.
Does a level keep pulling price after price arrives?
No, and assuming otherwise is a common and costly error. Once price reaches a leading strike, the dynamic changes: the strike stops acting as an attractor and starts acting as a reaction point, so the trader should look toward the next structure instead.