The Breakout Trade

[mark04]

The Breakout Trade
At the beginning of the day we were below the pivot point, so our bias is for short trades. A channel formed so you would be looking for a break out of the channel, preferably to the downside. In this type of trade you would have your sell entry order just below the lower channel line with a stop order just above the upper channel line and a target of S1. The problem on this day was that, S1 was very close to the breakout level and there was just not enough meat in the trade. This can be a good entry technique for you. Just because it was not suitable this day, does not mean it will not be suitable the next day.
The Pullback Trade
This is one of our favorite set ups. The market passes through S1 and then pulls back. An entry order is placed below support, which in this case was the most recent low before the pullback. A stop is then placed above the pullback (the most recent high - peak) and a target set for S2. The problem again, on this day was that the target of S2 was to close, and the market never took out the previous support, which tells us that the market sentiment is beginning to change.
Advanced
As we mentioned earlier, there are lots of ways to trade with pivot points. A more advanced method is to use the cross of two moving averages as a confirmation of a breakout. You can even use combinations of indicators to help you make a decision. It might be the cross of two averages and also MACD must be in buy mode. In the example below the market passed through S1 and then retraced to the S1 line again. It then formed a channel. At around this time we had a cross of the averages, MACD signaled buy and there was a breakout of the channel line. This gave a great signal to go long with a target of the original pivot line. Mess around with a few of your favorite indicators to help determine an entry around a pivot level but remember the signal is a break of a level and the indicators are just confirmation.
Best Regards
Mark.

 

[Firma]

any picture:-?

 

[ProfitMaximizer101]

A breakout is the sudden rise or fall in the usual trend ahead of the resistance and support levels. At some places, these are considered as the breakouts only when there are breaks indicating all time highs or lows in the stock prices.
In general, we can define breakouts as the rise or fall in the Forex price actions ahead of the recent support and resistance levels.
These breakouts also indicate that the new trend has started or the same trend is continuing with slight variations. It can bend towards upward or downside of the usual Forex trend and depending upon that trend action and changes traders can make buying and selling decisions.
These breakouts have great importance in the Forex trading because they have the potential to formulate a path for further movement of the share prices that means they can turn the trend motion in to their own way.

 

[Firma]

one question please:-?

how to avoid false breakout

 

[matfx]

The Breakout Trade
At the beginning of the day we were below the pivot point, so our bias is for short trades. A channel formed so you would be looking for a break out of the channel, preferably to the downside. In this type of trade you would have your sell entry order just below the lower channel line with a stop order just above the upper channel line and a target of S1. The problem on this day was that, S1 was very close to the breakout level and there was just not enough meat in the trade. This can be a good entry technique for you. Just because it was not suitable this day, does not mean it will not be suitable the next day.
The Pullback Trade
This is one of our favorite set ups. The market passes through S1 and then pulls back. An entry order is placed below support, which in this case was the most recent low before the pullback. A stop is then placed above the pullback (the most recent high - peak) and a target set for S2. The problem again, on this day was that the target of S2 was to close, and the market never took out the previous support, which tells us that the market sentiment is beginning to change.
Advanced
As we mentioned earlier, there are lots of ways to trade with pivot points. A more advanced method is to use the cross of two moving averages as a confirmation of a breakout. You can even use combinations of indicators to help you make a decision. It might be the cross of two averages and also MACD must be in buy mode. In the example below the market passed through S1 and then retraced to the S1 line again. It then formed a channel. At around this time we had a cross of the averages, MACD signaled buy and there was a breakout of the channel line. This gave a great signal to go long with a target of the original pivot line. Mess around with a few of your favorite indicators to help determine an entry around a pivot level but remember the signal is a break of a level and the indicators are just confirmation.
Best Regards
Mark.

Show us some picture of your description especially you mentioned two moving average cross as confirmation of breakout.

 

[ProfitMaximizer101]

The false trend breakout - As a trader, you must look at your forex trends and charts, as an analyzer. There are times when a profitable forex trend turns to a false forex trend due to two main reasons:

(a) Breaking economic news (b) Market just opened

There are couples of steps to help you avoid being a victim of a false trend. Always have your forex calendar open to seek if there is any major news occurring for the day and do not trade a signal when the market opens within the first couple of seconds or minutes. There are some other factors that may affect a profitable trend forex system that is out of your control for ex. political news and weather.