The Zone Break Out

The Zone Break Out

This is a method I developed to bring together the basic elements of trading and the knowledge I believe it takes to become a professional or full time trader. I think it is fair to say that I was influenced by many of the best traders and many of the things I usesd have been used by others. The Zone Breakout method combines Support and Resistance, Fibonacci, Price Action, Trend Lines and sound Money Management. If you leave out any one of these items you will not be successful.

Zone Breakout is a way to identify consolidation and Support and Resistance. You use a box to set up your zone. This is unlike any other box because it is not based on some arbitrary time but on Price Action and Fibonacci. We attempt to draw the box around price as it is consolidating. We do not draw when price is making big moves. It is my contention that after a period of consolidation you will get a break and normally that move is enough to give you profit. Following all the rules will provide some filters and help eliminate false breakouts. At very best you are going to lose 20% of the time. With this method, you wins should be far greater than you losses so anything about 50% is winning, but 80% is as good as it gets.

I will attempt to teach you the entire method as we proceed in this thread. Please understand you must practice, and have patience to master the method.


Currency: I am currently only supporting the GBP/USD and EUR/USD, although this method will work well on other pairs.

Timeframe: M15 (although we use other time frames to help)



Entry : Wait for candle to open outside the zone. Do not enter on penetration.

Take profit:
1- Use Fibo levels, support and resistance, etc
2- Look for reveral candles and formation.

Stop loss:
1- Use Fibo levels, support and resistance, etc


I will be posting charts.

Here is our current position and normally we would have already drawn the Zone box. We try to wait for price to consolidate and then look for the breakout. I have pulled fibs on the major move of the day and looking for price to settle between two fib areas.

I have drawn our box or zone between the 50 and 23.6 retrace. We are looking for a break of this area to trade. We must take in to consideration the time of day and the fact that we have not had much consolidation yet so I will be updating this as price action slows down.

I do pretty much the same thing. Im looking forward to your charts.

Any good method uses more than one time frame. Here is a posting of the 4hr chart as it stands now. You can see the we may possibly break a trend line on the 4 hr at the same time we are coming out of our 15 min zone.

Thanks bogus,

I think you will enjoy this because it is pretty simple and uses multiple time frames to confirm what we are seeing on the 15 min. I enter on 15 minute chart but it is always more accurate when we have a break of a trend line or fib area on a larger time frame.

You can see time of day plays a big part in this method. It is always a much better trade when price action has slowed for a while, consolidated and then we make the trade when things are moving again. As you can see here we are retreating back into the zone. We are bouncing off the 4hr trend line and we should dance around in this zone for a while before seeing a true break.

Here is where experience pays off. We don't just jump when we break out of the zone. As I said before, time of day and price action determine our move. Also still watching that 4hr chart.

We finally broke consolidation. I am short and have locked in one point profit.

My short position was confirmed by breaking trend on the 4hr time frame at the same time as the 15 min and one hour.

Running back down......sometimes you have to stick with it.

I just jumped out at the 200 ema. Might reload down to the next level.1.4775

The tick is my target from 1.4953

Good look at the 4hr chart. This chart is the key to success in this market.

Thats what I feel. The 4 hr is the master for me as a day trader.It gives clarity.

As you can see on the 4hr chart we had the two trend lines in place. The upper was penetrated at the same time we were breaking the zone box on the 15 min. I actually used the last fibo swing to determine my target, at the 61.8. As you can see we hit it about the 14880 area.

Now in reality I entered this trade twice. The first time it came back on me and knocked me out a one pip profit. The second time I rode it for some pips. When the market is ranging tightly as it is now, this method is still good but it requires some patience.

Here is the 4 hr chart.

The yellow box indicates where the original zone box was drawn last night. In reality it should have been drawn where the blue box is later on. Price was consolidating a little later last night. Usually it will start to tighten up after the US session. The thing about this method is simply this. We are attempting to take a trade long or short on the breakout. It can happen at anytime but typically takes place in the Euro session. The boxes or zone really means nothing and simply gives you a visual reference between two fibonacci areas. The very best trades are when we are breaking the 38.2 or 61.8 areas. Also, breaking the high or low of the previous day. You must watch because there is usually some back up. Setting a stop behind a fib area is a good idea. Anyway this was today.

No sure where price will consolidate tonight. I will probably not take a short until we break Friday's low. I am posting a chart of both 15 minute and 4hr. The 15 minute chart will be revised but you can see the the areas on the 4hr we need to break to go short. It is just as likely we could go back long.

Here is the 4hr chart.

As you can see we are penetrating the low of Friday. This is the area I have set as my entry for a short. I will let a 15 min candle open under this level and then watch the price action a bit before entry. Always look for a pull back once we break new ground.