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Notice how, on the run up to major news announcements, market commentators, almost collectively, form a consensus view and then extrapolate that view to what is usually a cataclysmic end result.

Prior to the Sunday elections in Austria and Italy, one could have been forgiven for thinking the Euro was about to collapse once again and the long awaited parity with the US$ was just around the corner. But wait, what the Euro did was breathe an enormous sigh of relief as it gapped lower and immediately reversed for it's best one day rally in months.

Those commentators were still worrying about Italian and German banks failing and bringing down the Euro. The reality is that, despite tumbling on Monday, Italian bank shares have since recovered, up almost 10% so far, as some form of bail out is now expected. And what of Deutsche Bank's share price that spiralled down during 2016 until Trump was elected, resulting in a 40%+ rally so far. As an aside, it seems Trump has almost $400million in mortgage finance from DB!

 

From the blog

Trading False Breaks

Non Farm Payroll, NFP days, are well known for surprises and violent whipsaws.

False break outs are either the bain of the Forex traders life or one of the best trading opportunities available. I go with the latter view, I'm seldom comfortable with breakouts as there is a very high probability of false breaks so I like to be on the look out for failing breakouts as the probability of a move against the previous trend is higher.

Trader Vic, Victor Sperendeo, detailed the 2B false break in his 1991 book 'Trader Vic, Methods of a Wall Street Master' Take a look at the picture below.

This is how to trade them, see the chart and desciption below....

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