Stop Fishing with False Breakouts - forex trading signals daily

Stop Fishing with False Breakouts ~ forex trading signals daily

False Breakouts to catch Stops

Stop Fishing in Forex

1 hour Stop Fishing | False Breakouts 

The Euro

 penetrated the monthly pivot (second test) but closed above it on the hourly chart (rejection). From there the Euro tried to break to the upside but market could not break the orange line (January low). The penetration of the recent pivots (low, high - red circle on hourly chart) and thus the stop fishing on both sides very often precedes larger moves in the market as most of the traders are already stopped out or trapped in the wrong position.

The failed break to the upside (orange line) with the clearing of the stops above the recent high (1.2614) of the short positions led to a third test of the monthly pivot today, which got already penetrated at the second test (weaker now). Some indication for a break of the monthly pivot were the facts that it was already the third test, the hourly close of the 11 a.m. candle below the monthly pivot and the confirmation of the break at 12 a.m. on the 5 min chart and at the 3 p.m. hourly candle close (lower close than the range of the breakout candle-blue circle on hourly).

 The blue circle on the 5 min chart at 1 p.m. shows how the monthly pivot started to act as resistance now and the green circle shows a typical 3-wave consolidation pattern before market impulsively moved down. The Euro found some support at  61.80 % fib retracement of the recent swing up at 1.2517 (brown line) and from there the Euro retraced up to the 61.80 % fib retracement of the recent impulsive wave down at 1.2543.

The consolidations below the weekly and monthly pivot on the hourly chart can be seen as bear flags.

Prior to the impulsive wave down market penetrated the recent lows (blue and red line), which often gives some short term support (see the candles with the long wick which penetrated these levels (12, 12:15, 14;20 p.m.-stop fishing accomplished).

Weekly and Monthly Pivot Point

On the 5 min chart (below) we also see the changing role from support to resistance of the weekly pivot and the August 2010 low (purple line). This price zone provided support in the Asian session (ellipse) before market breached this level (9 a.m.) and retested it at around 10 p.m. (now resistance).

5 min  EUR/ USD Chart analysis

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Stop Clearing and Price Rejection - forex trading signals download

Stop Clearing and Price Rejection ~ forex trading signals download

Price Rejection at Support/ Resistance

Stop Clearing at Key S/R levels

Pivot Points in the Euro

Daily Double Top

EUR/ USD had a relatively quite session. On the daily chart we see that the support level around the monthly pivot at 1.2568, the low of August 2010 at 1.2588 (purple line) and the 20 SMA (purple) held the market so far.

1 hour Pivot Points

The circled areas on the hourly chart (left) show how price bounced from support/ resistance.

On the hourly chart we see that the Euro moved up to the daily pivot at 1.2611 at 7 a.m. GMT but market could not breach the resistance and moved lower from there. The Euro penetrated the monthly pivot and cleared some stops below it and yesterdays low but the Euro closed above this key resistance level on the hourly chart (green circle).

After the clearing of the stops and the rejection of  prices (close above the monthly pivot on the hourly and higher low on the 5 min chart) market moved to the other side of the consolidation (1.2568 - 1.2614) to test it.

The EUR/ USD breached the pivot point and the recent high at 1.2614 (stop clearing) but the key level at 1.2624 (orange line- January low) provided strong resistance and the Euro bounced back.

The false breakouts (stop clearing) seem to be typical in a quite session when everyone is waiting for major news and thus traders are lacking commitment/ low participation.

5 min Forex Chart Education

On the 5 min chart (above) we see how price bounced from support/ resistance (blue circles) and the formation of consolidations/ bull/ bear flags (red circles) as well as some Fibonacci extensions (100 % and 161 %).

The price zones of the consolidations (red circle) provided some temporary support/ resistance as the market moved back into these zones.

At 9 a.m. market formed an inverted Head & Shoulder at the purple line (August low 2010). During the pattern market did not confirm the break of the purple line (no close of the succeeding candles below the range of the 9:30 a.m. breakout candle on the 5 min chart). Market breached the brown neckline and moved up to the H&S price target (100 % of the larger swing in the H&S-(left shoulder to head)-moved to the break of the neckline).

Between 1 and 3 p.m. the Euro breached the monthly pivot but the Euro formed a higher low and closed above the monthly pivot on the hourly chart (rejection of the breakout). From there, the Euro moved up to test the other side of the consolidation range and market found temporary resistance at the weekly pivot/ 161 % fib extension at 3 p.m. and the daily pivot at about 4 p.m.. The chance of a breach of the daily pivot increased due to the bull flag, the rising 10 SMA, the prior test at 7 a.m. (second test now) and particularly the fact that the prior 4-hour candle closing at 4 p.m. already touched (respected) the daily pivot so that this resistance level got weaker with the beginning of the new 4-hour candle (Breakout Timing setup).

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Clearing of stop and limit orders - forex trading buy sell signals

Clearing of stop and limit orders ~ forex trading buy sell signals

Forex Stop Running

Stop and limit order clearing through false breakouts

Today, in the Asian session the Euro triggered/ cleared the stop and limit orders above the high of last week and then started to retrace back at the daily 61.80 % fib retracement and the weekly 10 SMA.


The solely clearing of stop and limit orders at striking price points like market lows and highs is a typical manipulative market behavior and price target of the Forex Manipulators particularly at the first test of these levels with all the stop and limit orders there - false breakouts/ non confirmation.

Daily 61.80 % Fibonacci Retracement

On the 5 min chart (below) we had two pin bars which closed in the price range of the preceding 5 min candle (price rejection/ non-confirmation). Both pin bars led to a reversal, whereby the first pin bar cleared the stops below the recent low which often increases the chance of a price reversal - stop clearing accomplished.

We also had a kind of Head and Shoulders pattern on the 5 min chart. The market reached the Head and Shoulders target (neckline is the brown line).

5 min pin bar, Head and Shoulder

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Triangle Consolidation Pattern - forex binary options trading signals

Triangle Consolidation Pattern ~ forex binary options trading signals

Triangle patterns

Typical Triangle Consolidation pattern

Consolidation price zone

On the 5 min chart below we see the large triangle consolidation pattern, which got broken to the downside.
The market price of the EUR/USD moved down to the 61.80 % Fibonacci Extension and started a retracement back into the triangle consolidation price zone.

The Consolidation price zone of a recent consolidation pattern often acts as Resistance/ Support when market price retraces back into this price zone for the first time. So, the Euro retraced back up into the triangle consolidation price zone and market price rolled over to the downside most probably due to the recent consolidation chart pattern.

The Euro terminated its retracement and started its second leg down. The following typical three market swing consolidation pattern  between 11 a.m. and 1 p.m. GMT took as usual more time then the prior impulsive leg and the consolidation pattern also consists of three market swings. The consolidation pattern terminated after the third market swing of the consolidation pattern and market price continued its move down to the major Support zone of the monthly Pivot and daily S2 Pivot, from where market price finally bounced back to the upside.

5 min Triangle Consolidation Chart Pattern

Another Example of a Triangle Breakout 

Butterfly sell chart pattern on 5 min chart

The Triangle breakout

occurred with the beginning of the new hourly candle after the previous hourly candle closed exactly at the downward sloping upper resistance trend line of the triangle (Breakout Timing - red thick circle).

The Euro found resistance at the daily R1, which coincided with the 161 % butterfly sell pattern on the 5 min chart below. The Euro retraced down close to the typical 161 % Butterfly sell "book" target of this reversal pattern, which coincided with the daily Pivot Point.

The Fibonacci Analysis allowed to figure out support and resistance zones on the EUR/USD. The green ellipses mark Consolidation and Continuation patterns. If price retraces back into the price zone of the prior consolidation pattern then market price often temporarily finds Resistance/ Support at these chart price levels.

1 hour Triangle Breakout

5 min Butterfly sell pattern

Next Example from June 2012: Triangle Consolidation 

1 hour Triangle Breakout

On the hourly chart we see that the Euro formed a nice 3 wave triangle consolidation pattern (red triangle) after the explosive up move out of the ending diagonal triangle (blue lines). After the consolidation terminated the Euro slowly moved up from the daily pivot point (no confirmed close below it) supported by the 20 SMA (purple line)  and later by the 10 SMA (red line). Market respected (closed at) the weekly pivot at 12 a.m.GMT before the Euro broke through it at the beginning of the 2 p.m. hourly candle. Market moved up to the resistance zone at about 1.25 due to the 61.80 % fib retracement (swing down from 28th to June 1st), the previous low of May 25th (pink line), the 61.80 % fib extension (A-B at C), the 200 SMA and the daily R1. Market could not break this resistance zone so far.

Triangle Pattern in the EURUSD

1 hour Triangle pattern

On the hourly chart we had a nice triangle consolidation (blue lines) after yesterdays drop down, which, as mostly, is a continuation pattern. The triangle pattern took place at the 100 % fib extension at about 1.2706 from the prior wave down.
The triangle breakout occurred in todays European Session and it took out the prior low (minimum target of the triangle).
The weekly S3, the daily S2 and the 61.80 % fib extension at 1.2641 could provide some support.

5 min Chart Analysis 

On the 5 min chart we see that the 100 % fib extension from wave A-B at C at about 1.2756 acted as resistance yesterday. Furthermore, the sharp drop in price yesterday (D-1.2688) found support at the prior consolidation.

The breakout of the triangle occurred shortly after market touched (respected) the blue support line at 10 a.m. GMT (hourly candle). After the touch of the hourly candle the triangle support line got weaker and the break occurred in the beginning of the next hourly candle (11 a.m. GMT).
After market respected a level with the touch of a candle (particularly when the candle closed at this support/ resistance level) the next candle has the chance to break through this level either for a true breakout or for stop fishing the stops placed below the support/resistance (Timing).

The breakout candle on the 5 min chart at 12:25 a.m. GMT fished the stops placed below the recent low and daily S1. However, there was no close of the succeeding candles below the range of the breakout candle (no confirmation, so mainly stop fishing).

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