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Chapter 20, Part II. Trading Breakouts. Page 5

Discussion in 'Complete Trading Education- Forex Military School' started by Sive Morten, Dec 21, 2013.

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  1. Sive Morten

    Sive Morten Special Consultant to the FPA

    Aug 28, 2009
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    Chart #4 | 60-min EUR/USD wait for second top after breakout…

    So, a false breakout leads to price returning back inside the body of consolidation. False breakouts usually leads to price move at least to the opposite border of consolidation, or even to a true breakout in opposite direction.

    Chart #4 shows the conservative tactic that allows you to struggle against false breakouts. Applying this rule, you have to wait while price will return back to the broken border of the consolidation channel or trend line and then will establish a new high or low, depending on breakout’s direction. Here you will get more confidence that the market really intends to continue to move in the direction of the breakout. The other side of that is you will enter at worse price or even miss the trade if price action will be explosive, as on chart #3.

    Also, it is better to apply this tactic if the market has not passed yet in the direction of the breakout the distance equal to consolidation itself, since, this is a minimum target of breakout. I hope that you didn’t forget that also.

    Pipruit: And if so, what does it mean – that the market will not continue its move further?​

    Commander in Pips: Not necessarily. It just gives you more safety, since you will have some reserve room for price moving if the market has not covered this distance yet. This kind of trade just has more probability for success than those when the market has already reached its minimum target.

    Pipruit: And how we should trade them?
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