However, price did not break higher and trigger any trades but price did so something worth nothing on the close of last week’s trading. The market broke below the weekly support level triggering a wave of short trades to be triggered across the market which further pushed the price down.
This breakout was a classic bear trap move, trapping breakout, and trigger happy traders into a bad position. This type of breakout traps do generally occour around major S/R lines on the chart and that’s why we advise not to sell into heavy support or buy into strong resistance.
Now with the bears washed out, we can use this breakout trap to our advantage and be triggered long on any breaks higher to confirm the bullish authority. Breakout traps at strong areas on the chart can kick off longer term moves that last for weeks.
To learn more about Bull & Bear trap trading, see the Price Action Protocol
Looking over the charts for the last day of this trading week, we have identified a potential buying opportunity on the AUDCHF via a Price Action Signal.
The chart above clearly shows the larger range on the daily chart with price now testing the lower support level on the over all range. Last session an Indecision Candle signal formed at this important area on the chart which we can use as a trading signal.
The upper and lower wicks indicate that trading day experience consolidation or indecision at this key support, when price churns away like this at important areas on the chart it can indicate larger participants in the market are exiting/exchanging or opening new positions. The overall outcome of this indecision period is what we are interested in…
If price breaks out the top of the indecision, this could be used as a trigger to go long creating a high return trade. If you take a moment to have a look what price has done at this price level in the past you will see the market has generally been very responsive to this support and produced some clean bounces.
To learn more about Indecision Candle price action trading techniques, entry and stop loss methods please check out the Price Action Protocol.