~ Week Of May 2nd 2016 ~
Will Price Retest The Key Level And Then Move Higher?
Published by Jay - May 5th 2016
Two months ago the market moved down through a key daily level on the EURAUD pair, and then retested it on the 7th of April. The level held strong with price rejecting it and moving lower. On Tuesday however, price once again tested that level. This time, on the second retrace it didn't hold and the market made a strong move breaking through it. Will price now turn around and head back to the key level, presenting us with a trade opportunity to buy, or will it simply carry on higher?
In the Foreign Exchange Market price will often react around key levels with breakthroughs and retests. We can take advantage of these patterns by looking for trade entry signals on various time frames as an indication of what all the big players in the market will do next. It's imperative when looking for these kinds of setups that the level is a major one that all of the commercial traders are likely to respect again. This increases the likelihood of a trade working out in your favour when paired with a valid trade entry signal.
Take a look at our "Complete Forex Trading Course" which teaches people how to correctly ascertain where a major level is in the market, along with what makes up and validates a trade entry signal.