False and True Breakout Patterns

Euro Dollar Breakout

False and True Breakout Patterns

On the weekly time frame we see that EUR/USD closed right at the weekly trend line (respected it). However, it is unclear how strong the support from the weekly trend line (low from June 2010 and January 2012) will be during the next weeks.

Weekly Support Resistance trading

Timing of the Breakout

On the 4 hour chart EUR/USD strongly bounced back from the support zone at 1.2641 and in the following EUR/USD moved up to each resistance level (EUR/USD Market Update 18.05.12), touched it (respected it) and broke each resistance level in the beginning of the succeeding 4-hour candle (Timing) (see also 5 min chart below).

Finally, EUR/USD moved up to the weekly trend line (orange line) and found resistance there, also due to the 61.80 % fib retracement of the recent swing down at about 1.2783, daily R2 and the 100 % fib extension from the recent swing up from 1.2641 to b at c at about 1.2790 (see 5 min chart).

4 hour chart V shape turn around Trading pattern

Breakout candle

On the 5 min chart, we see that all three breakout candles occurred in the beginning of the succeeding 4 hour candle (12, 4 p.m. 8 p.m. Timing) after each prior 4 hour candle touched the resistance level. The breakout of the breakout candle 2 did not get confirmed on the 5 min chart  so that in the following price moved back in the consolidation. Another nice three wave consolidation took place before the next breakout occurred. Finally, EUR/USD closed around the weekly trend line.

5 min false and true breakout chart analysis