Forex Trading Strategy: The Breakout
‘Break out’ trades are traded most successfully in trending markets and occur when momentum breaks indecision in a ranging/consolidating market to bring price to a new level. As stated at the start of this article, ‘swing’ trading described above has a higher probability of trade success than Breakout trades.
The Break ‘Long’
If in an uptrend, we only want to buy or go ‘long’ until we reach our target price.
Look for tightly ranging bars where we can clearly define support and resistance.
Only buy in the uptrend, placing entry a few pips above the resistance level and stop a few pips below the support level.
The Break ‘Short’
Only sell in downtrend, placing entry a few pips below the support level and stop a few pips above the resistance level.
