False Breakout HUGE Correction Time ??

This pair has grabbed my attention once again, following my last trade idea back in August where I thought the price had peaked (and I still think it might have).

We saw the price drop initially, just touching 160, which was around the first target I mentioned in my previous idea (you can check my related post for details).


Since then, the price has been going up steadily, reaching new highs above 168. This recent uptrend is mainly due to the demand for the Swiss Franc as a safe haven because of issues in the Middle East.


If we look at the 8hr chart pictured below we have clearly transition into the next market cycle which is a distribution sideways period. This is normally the phase before a trend reversal.

For me, this change will be confirmed if we see the price close below 166.5 on a weekly or daily basis. This would also mean that the breakout we saw during the sideways movement wasn't real, which is something that often happens.


Here's my plan: I've already entered my first position after my TRFX indicator gave a DAILY sell signal, and I've set a tight stop at 169.


I'll be closely watching what happens around the 166.5 level. If the price breaks through cleanly or if we see support forming on shorter timeframes, that'll be a crucial signal.


If support builds around this level without a significant breakdown or close below it, it might suggest that the price will go up again.


If the false breakout is confirmed and we get a close back inside the distribution range then I will be taking more sell signals on the pullbacks as if this correction is confirmed there is 1,000's of pips to be banked.

Comment:

Looks like the fake breakout is confirmed as we are getting a clean fast drop into the sideways range.