Forex Technical
Traders Tip: The Length of Consolidation can equal the Breakout!
April 2, 2010
Jose Tormos - FXMVP
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Chart Analysis
Good morning traders on the chart to your right you will notice what happens in the market about 70% of the time. As mentioned 70% of the time the market begins to consolidate and traders become confused with direction. Keep it simple and follow this plan next time you encounter small consolidation in the range of 20 - 80 pips. I the market breaks out south but the current trend is bullish then think logically about taking that short trade because it may be a bear trap and the bulls might just take off after your bear entry which is very frustrating, Please see chart below for the example.
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Chart Analysis
As you can see above the chart provided a bear trap or false breakout with the original trend still being bullish. Those traders who use their UTP education can see this coming and wait it out until the proper breakout occurs. Here on the chart to your right you can plainly see that the bullish breakout occured in the buy zone and the length of consolidation equaled the length of the breakout. I encourage you to try this on a demo account next time you see this set up and learn a new trading skill that can help you capture your goal in pips!.
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