June has been a slow month. Both market wise and taking fewer trades. The latter is also due to day job / life commitments. However, I did spend quite a bit of time looking over historical charts. This led me to discovering some new price action signals that I deem feasible. However, more observation and testing is required.
The first "signal" that I'm revisiting is a breakout continuation play. In previous posts, I talked about how these trades never worked out for me. However, they all follow a certain price behavior. Breakout continuation doesn't work for me when price breaks above a resistance level when it's already in an uptrend.
However, I find that this tends to work better when a breakout continuation happens when a reversal is under way.
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GBPAUD 4-Hour
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Key price action details have been labelled as Signposts on this chart. The idea here is that there's a minor resistance level as price was trading in a downtrend. Once it reversed and broke above the minor resistance, further continuation can be expected if price pulls back to this level and holds. The reversal condition makes the breakout continuation signal much more reliable. Well, that is, until I have more data with forward testing.
The second signal is based on a certain price behavior in a post-event driven move. Again, the Signposts on the chart will show the key price action details.
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| EURUSD 1-Hour |
The post-event price action is interesting to monitor. If price fails to sell off again (in the direction of the original move), then it is possible to expect a break in the opposite direction. Since the initial move here is over on the downside, I am looking for price to break higher after it made a couple of minor selloffs but failed to breach lower.
Over the past few weeks, this type of whipsaw occurs rather infrequently. This is largely event driven, such as when a key economic release comes out. Even after the news comes out, you do need to see a whipsaw rather than a directional move. I honestly don't know what I would do for a directional move. This will require further observation as I'm largely not a fundamentals trader.
