GBPUSD fails at the highs and the lows today.

Yesterday, in a post, I spoke of how "the market" has been doing a lot of failing. That is, it breaks a high or falls below a MA line that has been holding, and instead of finding more momentum in the direction of the break, the price stalls and then reverses.

Markets/traders are creatures of habits. A lot of times that habits are based on fear, and fear can drive a lot of things (reference the US political environment).

As a retail trader, we have go with what we see. If we don't get the reaction we expect (i.e. there is a failure), we have to swallow our pride and get out - even at a loss. If it happens too many times, we can clam up and not trade as much, but maybe we can join the crowd and trade a failure in our bias direction.

For example, looking at the GBPUSD, say you have a bearish bias (Mike hammers that theme home). When the pair moves above the high from yesterday (at 1.22243), AND the 61.8% of the post-crash trading range (at 1.23274), the price should go higher. Instead of being fearful of a further rally on the break, look for a failure opportunity (see yellow area in the 5-minute chart). By being patient and waiting for a failure, you are trading with the "markets" recent habit of breaking a little and failing, and being more picky about your trades (not being in a hurry). Other traders end up joining you and the price tumbles lower toward the other extreme.

Let's say you are not bearish but more bullish (there was a lot of comments about the short squeeze to come yesterday). Looking at the 5 minute chart, the price fell below the 200 hour MA near the day lows (see green step line at 1.22646 currently). The break below that line stayed below for about 45 minutes but only extended by 13 pips from that level (HMMMM). Now it can continue, yes, but it may also fail and reverse back higher. So the trade is not to buy below the MA line, but wait for the failure to happen and then buy. put your stop somewhere below the MA line and see if the habit of trading the failures plays out. If it does, great. If it does not, get out.

When a "market" does not do what you think it should do on a break and you start to see that action become more of a habit, adjust your trading mindset/your trading habit. Eventually, you will notice the market returns back to the old, normal ways. That is, you will see the break and run (instead of the failure), but if the "market" is failing and perhaps you have become a victim of those failures (i..e have small losses), don't fight the "market habit". Join it!