The fake - King of entry opportunities!

You will nearly always find that the price will revert to the original trend/direction if a news announcement sends it the other way. It may be the day after or it may be 30 mins after, but if the adverse movement caused by the news event stops at obvious support/resistance, with the price action then indicating that it is about to move back to the original direction, this is then a fantastic place to enter with great risk/reward.

To all those viewing the last post I made, I've deleted it and moved it to my Cat's whiskers thread, exactly as it was. Sorry about that, but that's where all my stuff will go from now on. Don't worry, nothing commercial, just what I hope are useful trading tips.

Thought I'd resurrect this thread, as I consider the topic very important as it costs traders a lot of money. Fake moves happen virtually every hour of every day depending on what time frame you are watching, and I see experienced traders caught out by them, not necessarily trading them, but more missing them for what they are and failing to see the entry opportunities.

Take the Dax this morning, as I trade only the Dax during the European session. The price has been trapped all morning between the 10 minute 200ema/sma suporting beneath, and the 100sma which has come over the top. Having been very bullish for over a week, the Dax is showing signs of topping out, and is putting in reversal signs on the hourly having stopped between the weekly 61.8 and 76.4% fibs.

Now, neither long nor short is looking particularly attractive at the moment, but I'm leaning towards the short side for the first time since the Italian referendum, though I do trade the smaller charts. However, there was a pop uo to the 10 min 100sma which as I said has come over the top pf the price. Some people may have gone long on this, which would have been a mistake, because it was on this MA that, with smaller time frame confirmation, a good short entry was to be had., or what may turn out to be a good short entry if it doesn't come all the way back to BE.

And that is the point of this thread, the requirement to spot these ' fakes ' for what they are, and not trade them in the wrong direction, as so many people do.

That's all I wanted to say, except that these counter moves have a pattern, as they usually retrace to a particular MA, usually one of the big ones like the 100/200sma coming over the top or underneath. Wait to see what they do, where they stop, and what the candle closes look like, because they will very often offer a strong sign, with in this example, the 3 min ( one of the tfs I use ) 09.42 London time candle closing as a perfect shooting star, which combined with the 10 100sma, was a great place to go short.

Watch out for these fakes, because reading them well is a big part of successful trading.

Hi Cat. Interesting read. Thank You. Research in any trading, can lead you down that rabbit hole, for certain.

All the fakey stuff, is more complex then trying to predict which way a leaf will go next, in an erratic wind.

Over nearly 10yrs, I've spent my 10,000 hours (Malcolm Gladwell, "Outliers") pouring over charts, with this indicator & and that. Each time I've 'Discovered' a new winning combination, it goes for 6 months, or a year, and then hits a brick wall.

IMHO price is the most reliable source of information available. Am I right? Am I wrong? Since I don't claim to know anything as a 100% certainty, I am neither. Just another trading hacker with some thoughts and opinions.

What I currently do is the least stressful method (for myself) that I've tried yet. I'll give a brief description here:

I sell at highs, and buy at lows. But, just not any high or low. On the chart (EU H1, pictured here) I've drawn a box at the type of high I look for. What makes it special to me? Price left the zone in quick order, leaving behind a smaller candle.

Once price returned to this zone (box) it was rejected, and fell about 40 pips. This process repeats itself over and over, with very few fails.

The main benefit is you can use that relatively small stop, maybe right at high of box (13 pips) or slightly above. In many cases, once price returns to this level, and reacts near the close of the small candle, so you could even use a smaller stop, if you choose.

I really like it if these levels coincide with the Daily Pivot (central ONLY), previous days Hi/Lo, or current days Asia Session Hi/Lo. I also watch the strength indicator information, from 2 different broker start/end times, to compare variations relative to time.

You may notice that the first hit of the box, sent price down to Daily Pivot. Making that a very good place to manage/close your position. You may also notice that on the 2nd hit of the box, price even retraced down further. You can trade subsequent entries to, or into box, however they are not as reliable, sometimes. If you do trade it again, try having your Pending Order waiting "Inside of box", instead of the bottom (or top for buys).

Thanks for your input Diamond, I'm sure it'll be very useful for some. I don't trade EU, but I'd be looking to buy, it looks very bullish short to medium term. and 800 I'd say is on the cards for this week at least.

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YW. EU trade was just he 1st example I came across. I will trade almost any pair, if the set up is there.

Currently waiting on GU. M30 chart pictured:

Okay, gotcha. My Dax trade outlined above netted 40 pips down to the 30m 100sma, which this time, as opposed to the 10m, has come underneath to act as support, which is where I closed the trade, which gives you some idea of how I use a multiple time frame system to enter and exit. The Dax has been doing this for days, dropping a bit to then power strongly back up, so any shorts I've had have been short-lived. This is because there's still lots of support, and anyone trying to short and hold for the past week has been killed.

Any EU traders out there, her's a Daily EU chart of mine from the 23rd Nov predicting a bottom, So far it's holding, and as I posted above, looking pretty set for a bit of a bull run. Of course it's the Fed rate decision tomorrow, so that will move markets one way or the other depending on what they do.

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Good stuff Cat. I might just learn some goodies here!

Meanwhile GU triggered pending order. So far max negative was 1+Spread. Since Gbp is so strong right now, I took 1/2 off @ 1.27032, and moved SL to +1. No idea how far down price will go. My current TP is 1.2690.

That's the Daily 100sma resistance level you've got there, it's been holding for a while, though signs on my charts that it is soon going to come down, and I've got support at around 620 if it gets that far. Looks like it might move between these levels for a little while, though as I said, tomorrow's fed decision isl likely to blow all technicals out of the water.

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Point taken.

GCad on my radar now. Entry waiting @ 75. 20 pip Stop.

• Update: Entered with 1/5 normal size @ 72 (only good for +7). 1.6675 was not hit, then price retraced down 26 pips, so removed pending. Last move up found many sellers, so no longer interested, unless I get move up to at least 85. But that depends on Next news in about 10min. Price eventually stalled @ DPivot, & is going back up a little.

In NzdJpy sell. Set up occurred June of Last year.

• My initial stop was 43 pips, or 0.3%. It had a 7 pip DD before going into profit.

• After Trade was up 35, I went to BE. At +50 went to BE +8. The target is 112 pips.

Pic of June 2015 set up on H4 chart: