Example: Following is an actual Pfizer Inc (NYSE:PFE) chart between 10:00 AM and 10:15 AM on April 19,1999.
Blue arrow points at the 5-minute candlestick which closed at 124.00. This move creates a new exit point of 124.50 for our short position.
Next, look at the candlestick which is marked by red arrow. You can see that the price fluctuations WITHIN this candlestick crossed our exit point of 124.50, but eventually the candlestick CLOSED outside of this danger zone (actually - even below 124.00).
As a result these fluctuations are discarded, allowing us to keep our position open - we continue to stay short PFE with the current exit point of 124.50
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