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Chapter 20, Part III. Trading Fakeouts. Page 9

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 22, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Now let’s speak a bit more about reversal patterns – double top/bottom and head & shoulders, since they are most well-known. But this could be applied to any other pattern.





    Market makers like reversal patterns, especially well-known ones, because the public is very predictable here. On the following chart you may see the typical thoughts of the crowd. Since they recognize the pattern, they put stop entry orders on breakout of the neckline and stop from the other side of the neckline:


    Chart #4 | 60 min EUR/USD Double Top pattern
    [​IMG]

    Market makers will tell you – “Thanks a lot!” See fast acceleration up after fakeout? That is a stop triggering that adds fuel to upward move.


    Chart #5 | 60 min EUR/USD Double Top pattern failure with false breakout
    [​IMG]



    The same example with Head and Shoulders pattern on the hourly time frame:


    Chart #6 | 60 min EUR/USD Head and Shoulders pattern
    [​IMG]


    Chart #7 | 60 min EUR/USD Head and Shoulders pattern failure
    [​IMG]

    Pipruit: So, what I will have to do if I want to possess myself to fade a breakout, or the opposite – to open a position in accordance with a chart pattern and to not be hurt by a fakeout?​
     
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