Revisit multiple time frames, false breaks and the high impact news setup
Following what I wrote about the systematic analysis of trend in multiple time frames using USDSGD in this post “USDSGD price action: step by step guide for new traders” where we were able to determine which hat to put on for different traders and where the danger zones are, this is an update now on the USDSGD currency pair. We make several statements that individuals may find useful.
- Month to month trends represent a higher time frame movement that is also the stronger flow.
- Week to week trends represent a lower time frame; it is the lesser flow and in this USDSGD example, turns out to be a retracement movement only.
- Monthly and weekly highs and lows are convenient ways to visualise support and resistance which reversal also price action such as false breaks or bull/bear traps.
- Traps can be broken into 2 stages: a momentum-based movement that may be encouraged by high impact news followed quickly by a fade-the-momentum trade that reveals the underlying turning point.
- Both time frames are now aligned and pointing down
- In the name of FOMC meeting tomorrow, once again the market serves a high impact news that will force traders to choose between trading a breakout versus fading one.
Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.
“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.