Looks like the GBP pairs have started off 2017 pretty rough, and today the GBPJPY was no exception.
As you can see on this 8-hour chart, we had a clean, decisive break of this support structure today.
The candle that actually broke through this level has an above average range and closed quite close to its low. That makes this one a strong bearish candle which suggests that the bears are really getting serious here.
This breakout sets us up for a potential retest of former support, which is now anticipated to act as a resistance level.
The old structure support is now a hot spot for bearish signals to form, which would create a potent swing trade opportunity.
These kind of consolidation breakouts can kick off really strong moves, so if we don’t get a sell signal on a re-test, watch for any sell opportunities at lower highs.
Best of luck on the charts.
Follow Up
The pattern did break to the downside – following through with the bearish breakout candle, but we did not get the re-test signal we were hoping for.
I’ve found the best protocol for squeeze breakouts is to just buy or sell the breakout candle, because in cases like this one, there is no re-test and you end up missing out on the move.
Usually squeeze breakouts can be quite violent, and extensive – depending on the time frame you trade them on, and how long the squeeze pattern has been building up for.
I would like to do more quantitative analysis on these squeeze breakouts – but in order to do so, I need to figure out a way to programically detect these patterns. A big challenge.
If you would like to learn more about price action breakout trading, and trading squeeze breakouts such as this – you’re always welcome to check out our war room for traders.
Best of luck on the charts.
alin
GBP -Something to do with May’s public issues those days?