Chart Pattern Analysis | Forex Manipulation
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Chart Pattern Analysis | Forex Manipulation
Some Popular Trading Levels:
Important Highs/ Lows
Round Numbers
Pivot Points
Market price often comes back to popular chart levels like Round Numbers / Pivot Points and frequently penetrates them to trigger mainstream trading signals and to run for stops. Particularly, market Highs and Lows are important Manipulation points, where false price breakouts (false first breakout) occur to clear stop loss orders and to trigger breakout limit orders before market reverses back. Be careful with these mainstream trading strategies. Moreover watch out for pure stop runs at these chart levels, which can lead to a strong market turn around. In general, the first price breakout at important chart levels is often a false one.
Often a minor false price breakout or only a price touch of Round Numbers and Pivot Points comes with the first test of these chart levels to trigger close-by breakout orders and stop orders. The retracement to catch some stops of the breakout traders often gives the faked impression that the popular chart level holds as Support/ Resistance, thus encouraging mainstream traders to position accordingly. However, market often goes for a second test of the popular chart levels to clear the stop orders above/ below important chart levels before either retracing back or breaking through the price level targeting the next important mainstream level (stop order and limit order zone).
More in detail, if market price only touches (not really penetrating) the important chart level like Round Numbers and Pivot Points and retraces back then a second test of this market level is likely to catch the stop loss and breakout orders at this support / resistance levels of the traders who already had positioned themselves plus the new traders who interpreted the prior hold of the support/ resistance area as a reason to enter the market.
However, if market price already had penetrated the important support / resistance level to catch most of the stop loss orders and breakout orders before retracing back (failed first breakout) then the chances of a second test of the important chart level would diminish as the intention of the market manipulators to catch the stop loss orders and breakout orders already got accomplished.
Moreover, a clean break through a striking trading level without an immediate price retest is seldom and if so then the chance of a retest in near future is likely to catch stop orders of the breakout traders and to minimize the chance of an easy trade with a small stop lose at important price levels. Furthermore, the reiterating stop triggering process at striking chart levels would be in favour of a clean breakout to happen more often in the absence of any market price manipulation.
In general, market price goes there where the stop loss and breakout orders are anticipated.
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