The Touch and Go Setup Explained
A touch and go setup involves two levels working in sequence, where the first level is a reaction point rather than a destination.
What is a touch and go setup?
A touch and go setup is a structure where price is expected to reach a nearby level, react at that level, and then travel toward a second level further away in the opposite direction. The first level acts as a spring rather than as the final target of the move.
How does the Obsidian desk read a touch and go?
The Obsidian desk weighs three things together: proximity, meaning how close each level sits to price, position, meaning which side of price each level occupies, and power, meaning the relative strength of each level. Those three factors decide which level reacts and which level attracts.
- Proximity: how far price must travel to reach each level
- Position: whether each level sits above or below price
- Power: the relative strength of each competing level
What confirms the second leg of a touch and go?
The second leg is confirmed once price has clearly reacted at the first level and begun travelling away from that level. A trader entering the second leg before the reaction completes is anticipating rather than confirming, which is where the setup most often costs money.