In price action, the first thing we all learn is simple — a bullish trend means the market is making higher highs and higher lows, and a bearish trend means it’s forming lower highs and lower lows. That’s how we define trend direction. But once you start looking deeper, you’ll notice that the market doesn’t move in straight lines. It moves, pauses, accepts, and then moves again. That pause — that zone where price gets comfortable — is what I call Price Acceptance.
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Now, instead of looking at generic swing points, I like to anchor this idea using pivot levels, particularly the previous period’s high and low. In this example, I’m using the previous month’s high and low drawn as white dotted lines on a daily chart. These two levels act as the cleanest representation of where the market previously expanded and where it was rejected.
So, let’s connect this with the basic price action rule.
When a month closes above the previous month’s high, the market is clearly showing strength — a bullish continuation. When a month closes below the previous month’s low, it’s a bearish continuation. That’s straightforward. But the real story begins when neither of those happens — when price fails to close above or below the previous month’s or previous period’s range.
That’s the market’s way of saying, “I’m not ready yet.”
At that moment, the trend is either taking a short break before continuing, or it’s preparing for something bigger — maybe a complete reversal. This phase often confuses most traders, because the candles still move up and down, but there’s no real progress. You’ll see both sides trying to push, yet nothing sustains. That’s the pause of acceptance.
Now, the question is — how long can this pause last? For me, I give the market about three to four months. If, even after that period, price hasn’t closed beyond the previous high or low, that’s no longer just a pause — that’s acceptance. The market has found fair value there. It’s comfortable. You can think of it like a house being built — the foundation is set, and until new buyers or sellers arrive with conviction, price will continue to live inside that zone.
Example from the US Market: HIIMS
Let’s take a real example. In May, HIMS closed above the previous month’s high. That’s bullish — a clear sign of strength. But what happened next was interesting. For the next three months — June, July, and August — price stayed trapped within that May range. No new close beyond the boundaries. That’s acceptance in action.
Once I identify such a scenario, my attention shifts to the edges of that range — the previous month’s high and low become my active trading zones.
In September, price dropped to the low, took support, and bounced. Then, in October, it hit the high again and got rejected sharply, dropping more than 15% in just a single day. Think about that — the entire range between that high and low is over 30%, all happening within a so-called “sideways” phase. Most traders call that consolidation. I call it opportunity.
Understanding Grey Dots
Now that you already understand the foundation of Price Acceptance, let’s talk about how it actually shows up on the chart through green dots and grey dots.
When a monthly candle closes above the previous month’s high, the indicator quietly drops a green dot on the chart. That single mark tells you the market didn’t just poke higher, it accepted the higher level and closed there. It’s clean strength, the kind you want to see when momentum is real.
But things get interesting when the candle fails to close above the previous month’s high. In that case, the indicator prints a grey dot. It simply means price wasn’t able to push through the prior high. Many traders make the mistake of thinking a grey dot equals acceptance. It doesn’t. A single failed month can happen even in powerful trends. Sometimes the market is just taking a breath before the next push.
True acceptance is slower, quieter, and much more patient. You need to see multiple months where price keeps attempting the same upper boundary but fails to close above it. Only when you see grey dots stacking month after month can you say the market is settling into a fair value zone. Acceptance is a multi-month story, never a one-month headline.
Example from the Indian Market: Bank of Baroda
This exact behavior repeats across markets, and Bank of Baroda offers a clean example.
March and April were solid bullish months. Price climbed steadily, and the green dots at the top of the chart confirmed that the market was fully accepting those higher levels. Everything lined up with a straightforward bullish bias.
Then came May. For the first time, price couldn’t close above April’s high. That first grey dot showed up. It wasn’t a reversal signal, and it wasn’t acceptance. It was simply the first hint that the upward momentum might be slowing. One month doesn’t tell the full story. You need more time.
June and July followed with the same pattern. Price continued failing to make new highs, and the grey dots lined up one after another. This is where acceptance starts forming. Not loud, not dramatic, just steady repetition. Over these three months, the chart naturally shaped itself into a clear range.
Once those three months were in place, the structure was undeniable. A clean trading range had formed, and the swing edges became easy to spot. In this example, the real opportunity appeared in September, right at the range boundary between Previous Month’s High / Low (White dotted lines) and R1 / S1 (Orange dotted lines). Price moved out of that accepted zone, and the bullish trend found its next leg.
When you start to see these acceptance zones, you stop fearing sideways markets. You begin to understand that when price doesn’t move, it’s not wasting time — it’s building energy. And when it finally breaks, that’s when the real move begins.
So, the next time you see a few months of tight action after a big breakout or breakdown, don’t lose patience. Watch how the market behaves around those monthly high / low levels. If it’s respecting both sides and refusing to close beyond them, that’s not confusion — that’s acceptance.
And when the market accepts a level, you can trade the edges with confidence — until the market itself decides to move on.