We are not joking when we say that false breakouts are important and reliable trading structures. We warned about this on Monday and Tuesday and once again we were right – they work and once again, and proved to be effective.
Of course, I am talking about the indices here, and for the sake of this analysis, I will use the S&P 500 as an example. The index was forming a symmetric triangle pattern for a few weeks and then on Friday, the price broke to the downside. On Monday we came back inside the triangle and yesterday, the price definitely confirmed the lower line of this pattern as support. That sorts out the situation and cancels the sell signal from Friday. Next step? With the false breakout, the next step should be an attack (and a possible breakout) of the upper line of this pattern. The sentiment is bullish.
For a long time we have not seen this very popular instrument on the Forex Market - USD/JPY. Wednesday can be crucial for this instrument as currently, the price is testing ultra-important support on the 107.55. Here, we do have a combination of horizontal support and a dynamic one created by connecting the higher lows since the 23rd of June. Price closing a day below those supports will be a legitimate sell signal and price bouncing from this area will keep the optimism alive.
Now, moving to an exotic friend, at least for some of you - EUR/PLN. This pair trades very technically. First, we had a huge symmetric triangle, which recently gave us a downswing, and we got another one, this time a little smaller. The outcome is so far the same though – drop. The price is breaking the lower line of this pattern, which in theory gives us a sell signal towards the ultra-important, long-term horizontal support on the 4.4.