Support resistance levels that forex traders have no excuse for missing
I wrote a fairly comprehensive piece on 52-week highs previously. In this post, we look at examples of various forex pairs. From these charts, traders must expect the following when price nears 52-week highs and lows:
- Plenty of volatility as price tests and re-tests
- False breakouts aka bull trap/bear trap
- Reversal patterns such as head and shoulders, double tops and bottoms
As support and resistance levels, don’t expect 52-week highs and lows to be broken on first attempt.
Examples of forex price action at 52-week highs and lows
AUDNZD weekly chart
- AUDNZD beats 2012-low for 5 weeks before turning bullish
- Price penetrates on second attempt after retracement
- Early 2014 sees double penetration below 2013 low at points 3 and 4; both fail
- Price makes year high after retesting and verifying 2012-low as support
AUDSGD weekly chart
- 2013-low successful support; ’13 and ’14 lows are only 13.5 pips apart
AUDCAD weekly chart
- 2012-low acts as resistance; tops July – October rally
- The same level comes into play again early this year; although level was penetrated, struggle at level with long price spikes is clear.
AUDCHF weekly chart
- The very prominent feature of this chart is 2013-low support for shoulders in this reversal pattern
- The head is a brief penetration to new low that becomes bear trap
- Right shoulder confirms that 2013-low remains effective support
NZDUSD and EURUSD weekly chart
- This pairs began 2013 with lots of volatility and a brief 1-week penetration above previous 52-week high
- Price spends 4-weeks above then fails
- Another failed break
- Recently price breaks 2013-high repeated but never closed above in any week
- The EURUSD chart below looks like a sibling of Kiwi
EURAUD weekly chart
- EURAUD has cleaner price action compared to NZDUSD; very brief failed breaks take place at each 52-week high (second failure tops a head and shoulders pattern)
Let’s do this exercise on CADCHF
We can see that 2012-52-week-low saw some support and then resistance at points 1 and 2. Question: What will happen at point 3 this time?
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Soh Tiong Hum is Director of TerraSeeds Market Technician Pte Ltd. TerraSeeds is a trading educator in Singapore since 2005.
Soh Tiong Hum is a member and regular speaker at Technical Analysts Society Singapore events and has a bi-monthly lunch time event at IG Singapore on forex and stock markets. He is an avid blogger on technical analysis topics; his Twitter account @sohtionghum
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