Price action repeats
One thing that I learnt while trading using Tflow® in particular is that the market repeats itself. Previous support can turn into current resistance and vice versa. Thus if you can recognise or remember a price action the market has done before, then it is not far fetched to say that if ever this repeats, you would be able to capitalise upon it.
In these two examples, I want to point out two very common features:
- Previous monthly or weekly highs and lows as support or resistance.
- False breaks aka bull/bear trap that offer very good trading signals.
Let’s look at an example of this through a brief analysis of NZDUSD.
- After a period of down, price was supported by previous 2 months of low as well as the previous year low (2013).
- On the H4 chart, we see that price tested the support several times before heading up.
- After the initial up thrust, price retraced once more to look for support before continuing up.
With the above pattern firmly in mind, let’s look at USDCHF to find similarities.
- Even on brief inspection, USDCHF seems like a inverted copy of NZDUSD.
- Price has recognised previous month high as resistance and has tested it several times.
- There was a Bull Trap/False Break/WR of previous month high.
- After the 4th test, price has had an initial move down.
- Price has retraced back to previous box low as resistance.
With all the pieces matching up showing that USDCHF is just a step behind, thus looking at the current NZDUSD can yield tantalising clues of what to expect for USDCHF.
This story ‘USDSGD price action: step by step guide for new traders‘ offers a comprehensive guide.
Last time, many things that I wanted were just dreams, now I see them as possibilities. I’m looking forward to own pent-house suite in Manhattan overlooking Central Park because forex trading with Tflow® makes it possible. Find me on Google+