Ok here we go.. here's some of the patterns I've noticed signal a failed news break.
AUD Unemployment 19 July.
1. RSI crossed level. Enter at close of 5min candle 1:1 ratio. Why? Because you need to know what your range is so you know where to place your target.. therefore, entering before the close will do you no good.
2. It didn't make fresh new highs and crossed the 0.786 fib. In my experience, news releases will normally only retrace to the 50-61.8 area before continuing (if they retrace at all!). The RSI also crossed the lower level.
3. Risk the same 1:1 on the short side. Larger position size otherwise you'll only end up with a BE at best..
4. This pattern is classic.. I call it the 'slope pattern'. It shows there's no more volatility after the initial candle.. so will most likely fail.
This next example is EU but I'm unsure of the news release / reason for momentum. I spotted it when looking for another example.
1. Enter at close 1:1 ratio. I wouldn't have taken this trade as the RSI didn't match up. But it's still a good example.
2. That same slope pattern. RSI falling also (this won't make me alter my trade, but it does get my attention).
3. Push higher after almost hitting the 78.6 fib.. it didn't cross the level so trade still stands but it didn't make a fresh new high.
4. Crossed the 78.6 fib whilst also crossing the lower level on the RSI.
5. Enter short on break of low 1:1 ratio and larger position size.
This is purely just the TA part. The first step is to look at how much it beat / missed consensus based on the previous 7-8 releases, what the economic strength of the currency is, whether it's heading into key S/R lines and MA's on larger time frames etc. For example, if it's heading into the 100ma on a 30m or 1hr I probably wouldn't take the trade even if everything else matched up as the 100ma seems to hold good support/resistance. Same with 200ma and horizontal S/R levels.. if this makes sense.
These news strategies aren't set in stone so please don't go trading based on the 4 steps in these examples. Once you're in you really just need to trust your gut. I blabber on about a 100% success rate but that's only a handful of trades that I've entered based on my strict criteria.. I'm 100% certain that it's not definitely 100% successful.. But until it fails, I'm going to continue to bloat
For those interested.. how I learnt was by reading copious amounts of books and (most importantly), watching copious amounts of news releases to see what happens. This is how I've noticed the slope pattern over the years.
