It's a killzone. It doesn't mean you're going to make tons of money. In fact you have a better chance of losing money.
Unfortunately - I tend to talk more about losses, cuz it's the most important thing in trading to control. Sorry!
Assess your ATR, on this time frame. Know your acceptable loss. Control the loss if shorting in the killzone.
Prepare to lose! All traders need to do that!
Disclaimer:This is not advice or encouragement to trade securities or any asset class. This is not investment advice. Chart positions shown are not suggestions intended to assure you of an advantage. No predictions and no guarantees are supplied or implied. The author trades mostly trend following set ups which have a low win rate of approximately 40%. Heavy losses can be expected if trading live accounts or investing in any asset class. Any previous advantageous performance shown in other scenarios, is not indicative of future performance. If you make decisions based on opinion expressed here or on my profile and you lose your money, kindly sue yourself.
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If you missed it, you missed it. Too late to short now.
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So, price went straight into the killzone. The retreat is better shown on the 2H timeframe below. I explain a few things below the chart for trend followers.
Trend following means that you take higher risk for much higher long term rewards. There will be a higher failure rate but also a smaller proportion of high value trades. It requires significant resources and 'bottle'. Much experience is needed.
The 2H time frame at the leading edge, shows a retreat from the killzone. Now the work begins. Price could shoot back up or it can collapse. A trend follower's analysis of technical and fundamental data will inform of the probability of direction. Have a look at the 1H time frame below.
I see the 'killzone' as an area of optimal loss relative to the ATR (average true range), for a position entry.
New traders don't like to hear about 'loss'. It matters not. The reality is that optimal loss is what you can afford to lose in order to make a gain.
It's like if you are buying and wish to sell for profit. You may buy something with an idea that it may sell for higher. But what if it doesn't? You will need to know your loss on the deal.
So similarly a killzone is likened to the optimal range of price relative to what you can afford to lose. I'm not talking about 'you' personally.
Of course, you can't or shouldn't 'overspend' or suffer excessive losses. Getting the entry point on any trade to be right is one of the most important things. I couldn't go into it here. There are lots of tutorial posts on Tradingview if new traders wish to learn more.