Forex Trading: Lie or Truth?

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Let's learn to identify false and true breakups When the quotes approach to the diagonal resistance/support line makes traders follow the currency pair more closely. A breakout can involve a momentum move that can be used to our advantage. However, some players prefer to trade on the pullback and develop their own trading strategies. Anyway, we better have a set of rules on hand to be able to identify whether a breakup is fake or not. We have already discussed the " Three Knocks " strategy , based on false breaks of analytical lines. When it is a downtrend, positions are opened on retracements of the bearish resistance line. If a currency pair is controlled by bulls, we need to buy on rising support line pullbacks. The main objective of a trader is to identify the validity of a breakout.

To achieve this, you can use the qualifiers of Thomas Mexico Mobile Number List DeMark , author of the bestseller "The New Science of Technical Analysis." The first is based on comparing the closing prices of the bar 1 and 2 days before the breakout. Diagonal resistance will hardly be broken if the close of the day before the breakout was higher than 2 days before the breakout. The example of the Australian dollar shows that the bulls were seriously counting on attacking the diagonal resistance after the active growth in June July, but they spent all their strength just to address it. In the end, the bears took the lead and realized the "Three Taps" pattern using DeMark's qualifier . Demark qualifier №1 on AUD USD chart LiteFinance: Demark Qualifiers - powerful trader's tool |  Litefinance The №2 qualifier is rarely seen in Forex because the market operates 24 hours a day.



It is based on a gap: the opening price on the breakout bar must be above the diagonal resistance line (below the diagonal support line). In this case, a break will be considered true. Qualifier involves using a projection. Its value is calculated as the sum of the closing price of the bar on the day before the breakout and the difference between this price and the minimum of the bar one or two days before the breakout (whichever is smaller). If the projection size cannot reach the resistance line, the breakout to the upside is considered true. The same applies to diagonal support assaults: Projection   the closing price of the day before the breakout minus the difference between this price and the high of the bar one or two days before the breakout (whichever is higher.