The forex market is a constant battle between bulls and bears. There is wise saying that “Bulls make money, bears makes money but pigs are slaughtered”. If we do not implement strategic trading considering all the risks, having proper money management and mastering own psychology then the result will be obvious. I often note that in ranging market, one particular strategy always works. It is called “False breakout strategy”. In this article, I will illustrate how I used this strategy. False breakout strategy is based on the major support and resistance levels.
Time Frame and Currency Pair
The false breakout strategy can be implemented in any time frame and any pairs, but for this example, I took 4 hours candlestick chart on USD/SEK currency pairs. This means that each candle on the chart represents 4 H of price movement.
In ranging market, the price often reverse after an attempt of false breakout around the resistance or the support levels. This happens because of the buyers and sellers are in hesitant state of mind at tricky levels. (Figure 1 equilibrium condition). Figure 1. In ranging market, equilibrium condition prevai…