Forex Breakout Basics | Forex Factory

  • Forex Breakout Basics

    From dailyfx.com

    Trend traders enjoy the luxury of first identifying market direction prior to executing a trading strategy. Once found traders can employ a breakout strategy for entries. As we discussed in an earlier edition of Trend of the Day, there are many advantages to identifying and trading a strong trend. Below we can see a prime example of such a trending market. Currently the EURUSD has advanced as much as 542 pips since its July 2013 low at 1.2754. When looking at the chart below, it is important to notice the series of higher highs printed on the graph. With the EURUSD trending upwards, this makes the currency pair a ... (full story)

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reldas
Jul 30, 2013 2:42am
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Whilst this idea is fine one significant piece of information is not mentioned. When was price last at this level.
Look back to around 19 june and price reversed around that level now it has returned there and is showing resistance to future up move. However if it does break it could move another 130 odd pips to the big reversal point at 1.34 on 19 june.
So basically price is currently at supply so it will either break to the upside ,or, it will fall back to a previous demand level.
From the origin of the down trend starting in june to the point of trend change to the upside on 9 july the price has now retraced 76% of the down move. This is a good possibility of a reversal now so the breakout may well be to the downside.
Personally I would wait til the market shows its hand on the 1 hr chart.
The RSI is showing divergence to the downside and price is currently in a 60 pip range.
Just a few thoughts to consider.
Happy trading
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johnel
Jul 30, 2013 1:54am
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How to identify a strong trend?
Extremely easy, looking at the chart.
Then we can say: it was a strong trend... or not.
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