Here's a Head Fake Move-Did You See It?

One reason many fail to adjust to the market and get fleeced every time, like Technical traders, is because they don't notice the games that are played over and over again and thus they never learn. Here's one game, the head fake which I estimate to be found preceding about 80% of reversals in ALL timeframes, it may even be higher than that. I wrote about this around 8 p.m. Monday night, probably earlier during market hours on Monday too, in fact I did as the triangle had not broken out yet, but for now you can go back to Monday night's explanation of what we were expecting to see on a EUR/USD head fake move here.

The charts...

 Here's the EUR/USD at yesterday's close and now so Reid's comments weren't as horrible as the market suggests, but it's a good excuse.

Here's opening trade in the pair for this week, in orange on Monday we saw this triangle as the Greek issue was being discussed, on the initial resolution (if we can call it that with a serious face) the Euro popped above $1.30 as I said it would in a head fake scenario, this is an important psychological level, it runs the shorts out and pulls the longs in and it's absolutely a part of a strong reversal.

When price moves back below $1.30 and ultimately below the apex of the triangle, longs are at a loss and they start selling which creates a snowball effect as more supply is on the market than demand, coupled with short sellers selling as well that adds even more supply. This gives the initial reversal a boost to get it going and that is one of several important reasons head fake moves are seen so often before reversals, in fact so often they become good timing indicators.

The way you can sum up this concept is a saying from a friend of mine, "From failed moves come fast moves" for all of the reasons I laid out above. There are more reasons why we see these head fake moves and we are lucky that we have an indicator that can help us tell whether it's a head fake move or the real thing, but before the triangle ever broke out i explained how the clearly visible bullish continuation pattern was a perfect set up to take advantage of technical traders that would read it as exactly that.