Where a stop belongs on a chart
Lesson 2 of 4 · about 7 minutes
3 questions, each checked the moment you answer it.
6 steps · about 7 minutes
The interactive lesson walks these ideas one screen at a time and checks your answers as you go. The text below covers the same ground for reading.
Set your stop-loss where your trade idea would be invalidated
In this example, a move above both highs invalidates the planned reversal. This is the February 2026 double top: two highs at almost the same price, with the lowest price between them, the neckline, at 1.17733. The plan is a short, taken because the market ran up to the same ceiling twice and turned down both times, and it expects price to keep falling away from that ceiling. A market trading above 1.18282 and 1.18262 is not turning down there. So the price that contradicts the plan is what fixes the stop, rather than the amount you are willing to lose.
This plan puts the stop at 1.18310
The plan rests its stop one pip above the 1.18300 that met the rule, at 1.18310. That sits 2.8 pips above the higher high at 1.18282, which is the top of the whole structure. Two things decide that small gap. A short is closed by a buy, and a buy fills at the ask, so the stop has to clear the spread rather than sit exactly on the high: the recorded quote in course 1 showed 0.9 pips between the two sides, a figure measured on course 1's recorded EUR/USD quote and not a standing price. And 1.18310 is not a round number, while 1.18300 is one the chart never turned at. 1.18282 is a price this market reached twice and failed at.
Once price closes below the neckline, that level becomes a ceiling
Before the break, price fell to 1.17733 between the two highs and turned back up from there, so the neckline was the floor of this shape. Then a candle closed below it, at 1.17657, and the market was on the other side of that level. From that point the same price sits above the market, and a market trading back above 1.17733 has taken the break back. Which price would contradict a short then depends on what that short is reading.