EM FX Lesson: Never Chase the Break

Looking back, one of my pricier lessons in EM FX was chasing what looked like a clear break higher in $ZAR against the dollar a few years ago. I saw it pierce a long-standing resistance level on the daily, got excited, and just went for it, thinking I was getting in on the ground floor of a new trend. Of course, it wicked right back down almost immediately, stopping me out for a decent loss, and then meandered back into its previous range. The discipline to wait for a retest of the broken level, or at least a confirmed close above it, before committing size is something I preach to myself now, especially with the whippy nature of some emerging market currencies. It often pays to be patient and let the market confirm its intentions.