I think it's just like bounces, really. If price bounces off say twice in a small time span and then comes right back to that line with strong momentum, then there is a high probability that level will break.
- #7,501
- Jan 22, 2009 11:44am Jan 22, 2009 11:44am
- #7,504
- Jan 22, 2009 11:52am Jan 22, 2009 11:52am
You can never be 100% positive a level has broken until the move is well under way. There are some things to look out for, though.
Firstly and most importantly it should be a level that has been tested multiple times, for a solid breakout I think being tested 3 or more times is a good sign (but never guaranteed of course).
One clue that a breakout may be imminent is that assuming the level has been tested a few times, look for a recent testing that had a sharp bounce off the level, but lost momentum very quickly and is heading back down.
Here...
- #7,505
- Jan 22, 2009 12:08pm Jan 22, 2009 12:08pm
Fear is something that yes, will probably only be overcome with screen time, experience, and confidence.
As for that trade, I think you actually made the right decision to get out of it (we'll see, but right now it's looking like a false breakout). I find breakouts generally work best during the European session, especially around their open and the US open. It's not surprising to get a lot of false breakouts during the 2nd half of the US session and during the Asian session.
Of course that's not to say that if you just hold on to the trade...
Update: Managed to get out of that at +2 pips, but I'm still in a previous "false break" trade on USDCAD. I hope i can get out at breakeven with that and close the platform. I'll be more careful with breakouts from now on.
- #7,508
- Jan 22, 2009 12:29pm Jan 22, 2009 12:29pm
- | Joined Nov 2008 | Status: I support the resistance | 1,033 Posts
Yup, as a matter of fact, I am just about to lose what I earned today because I entered a false break on the EURO. I probably should have ended the trading day while I was still in profit. Bummer!
Update: Managed to get out of that at +2 pips, but I'm still in a previous "false break" trade on USDCAD. I hope i can get out at breakeven with that and close the platform. I'll be more careful with breakouts from now on.
More importantly is to have a maximum stop-loss defined. No lallygagging, no moving stops in hopes that things reverse. It's the attitude of "I hope I can get out at breakeven" which will often cause losses to pile larger and larger as breakeven is never reached.
- #7,510
- Jan 22, 2009 12:43pm Jan 22, 2009 12:43pm
It happens, even during the most perfect of setups there will be moves that make you scratch your head and shake your fist
More importantly is to have a maximum stop-loss defined. No lallygagging, no moving stops in hopes that things reverse. It's the attitude of "I hope I can get out at breakeven" which will often cause losses to pile larger and larger as breakeven is never reached.
- #7,511
- Jan 22, 2009 12:52pm Jan 22, 2009 12:52pm
The markets love to sucker you in to false break outs then quickly eat up your stop.
Just look at Cable yesterday (and the Cable Update thread) most people thought it would tank if 13682 was broken, the rest put longs on at this support level.
Price dropped, long stops were hit, shorts were put on and price reversed for 300+.
- #7,517
- Jan 22, 2009 11:34pm Jan 22, 2009 11:34pm
- | Joined Nov 2008 | Status: I support the resistance | 1,033 Posts
Some spots that seem obvious that I'm looking at:
USD/CHF - short @ 1.1825 if it gets up there; obvious spike down to support from high of last year or so ago, spike visible on hourly and daily charts; 76 fib from wave from December; 76 fib from wave from November; and 61 fib (@ 1.1831) from the big downtrend that started in March 2006. Long @ 1.1892 mentioned in a post a couple pages ago.
GBP/USD - short @ 1.4345, obvious support from 12/31, price has reacted there historically. Price basically sailed down through this point on 1/20, did retest...
- #7,520
- Jan 23, 2009 12:21am Jan 23, 2009 12:21am
I have a line close to 1.2800-1.2820 but it dropped so fast, dont feel like longing...
. I have another long at 1.2802 with another small position. Hopefully we'll see some action there.Update: Bad call to close that trade... Would have got at least 30-40 pips from this move. Lesson learned: scale out, don't close everything.