As yesterday, in the same manner today we have had a lot of opportunities to trade short term trends in currencies. Firstly, false breaks in aud/jpy and eur/usd were confirmed. If you still remember, both pairs broke down two days ago (on the 18th of April). However, they failed to develop a longer down trend and made reversal patterns the same day. Let me give you a few points on how I identify false breaks.
In the first place, when a security breaks a support or a resistance and reverses the same day, it is a sign of a false break. Then I see if it is able to go beyond previous low (if it broke down) and continue its trend. If it doesn’t I want to see two points of resistance formed and support to hold. And finally if the resistance is broken I assume that a short term trend has changed and the breakout was false. Therefore, I look for opportunities to play from the long side.
This could be very well seen both from eur/usd and aud/jpy. The pairs broke the support, went down quite a distance and then jumped of the level. Then they were no longer able to break the short term low and formed two points of resistance. You could then either place a breakout trade in the pairs, or wait for European session and buy when there was a retracement in the pairs. Charts of the pairs can help you understand better what I mean.
There was also a very good opportunity to trade gbp/usd when very important data from Great Britain was released (Bank of England minutes). You had to place a buy stop order a few pips above 1.6271 level and go with the trend that news created. Also check the chart of gbp/usd.
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Disclaimer
Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.