✨ The Dejavu Effect ✨What is Dejavu?
Dejavu is a term used to describe a feeling that one has lived through the present situation before.
How does this tie in with the markets?
Technical analysis is based on patterns repeating itself over and over again. Technical analysts believe past trading activity and price action can be valuable indicators to future price movement.
How can we prepare ourselves?
Some of the ways we can prepare ourselves is by doing the following:
- Learning patterns that reoccur over and over again such as bull flags, wedges etc.
- Identifying candlestick formations and understand what they mean e.g. shooting star candles means there’s a possible trend reversal from bullish to bearish
- Learning to identify structure levels where price can react in the future
- Understanding fibonacci and learning how to use it effectively.
[Once we’ve identified a possible market dejavu moment, what next?
Following identification, the next step is confirming whether this is in fact a similar move to historic price movements. The types of confirmations that can be used are the following:
- Trendline breakout
- Fibonacci rejection
- Lower timeframe patterns
- Moving average strategies
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EURUSD - The Dejavu Effect
1. Bullish Correction. We identified a falling wedge which resulted in price moving higher.
2. Bear Correction. The bullish move was short lived with a bearish correction which resulted in…
3. Three Wave Falling Wedge. This falling wedge pushed price up to the double top region.
4. Ascending Correction. The move up to the double top could be monitored using an ascending trend line to monitor the correction.
5. Minor drop. Once price broke down, we had a minor drop.
6. Major drop. After another small correction we had a major drop.
Notice how we didn’t specify whether we were talking about the Blue phase or Red red phase… Dejavu.
