Support turns Resistance – an often reason for price spike
Price spike often encountered phenomenon in forex trading
Forex traders often encounter price spike in the market. They happen regularly around market-moving events such as interest rate announcements or following important speeches or press releases. However a price spike could also happen for no better reason. A price spike happens at resistance or support levels. It triggers a stop loss order. Price spikes are frustrating because it can trigger stop orders – making forex traders feel that they have been stolen a good trade. A good way to trade a price spike is to observe and trade a ‘wash N rinse’.
Wash N rinse trade and phenomenon
Wash N Rinse many boxes is a very clear and easy setup. We have seen EURUSD formed in EURUSD.
Once setup appears, the previous support will now turn into resistance.
The support turned resistance is very critical. If price is resisted by this resistance, it means a continuation down.
If price closes back above this resistance, then EURUSD would perform wash n rinse again and turns bullish.