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Forex Breakout Strategy: Simple Trade, Simple Profits.

Ezekiel Chew (asiaforexmentor1)
Mar 09 2012 at 13:18
24 posts
Forex Breakout Strategy: Simple Trade, Simple Profits.

Forex Pair: Usd Chf
In Forex trading, there are various forex trading strategies.
I would like to show you a forex breakout strategy as shown in the chart above.
It is simple yet highly powerful.
In the chart above, we see a series of bearish bars (red bars) -> marked by the yellow arrow pointing down at the top of the picture.
This series of price action bearish bars represent the selling momentum in the market. And the selling is gaining momentum with the increasing number of bearish bars.
Therefore, we will be watching the chart for a chance to trade it down, considering that the trend MAY have change from an uptrend to a downtrend.
Forex Breakout Strategy: Simple Trade, Simple Profits

Soon after, it formed a big long price action bearish outside bar as marked by the yellow circle.
(This confirms the downtrend as it has broken the previous lows of the previous uptrend)
With the big long price action bearish outside bar, and the previous series of bearish bars.
- It confirms the selling momentum in the market is very strong.
Immediately after the bearish outside bar, it forms 2 smaller inside bars after which.
Forex Breakout Strategy: Simple Trade, Simple Profits.

What i see here is a setup for a forex breakout strategy trade.
- Since the selling momentum is so strong, and with a price action bearish outside bar. We can place a pending sell order below the bar.
Therefore, i will place a pending sell order as marked by the yellow dotted line.
And my stop loss is above the previous bars opening and closing. (marked by the orange line SL)
Our First take profit target will be the previous low (marked by the orange line TP1)
And our final take profit target will be at the next low (marked by the orange line TP2), which also coincides with our 150 ema.
Forex Breakout Strategy: Simple Trade, Simple Profits

Forex Breakout Strategy
Pls read through the explaination while looking a the charts for at least 2 times to fully understand what i meant.
I hope you’ve learnt how i would have entered on the above situation (forex breakout strategy) and how you can add this method to your future trading methods.
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Ezekiel Chew
Paul Ng (paulng)
Mar 10 2012 at 18:33
43 posts


I've not replied to any of your posts, but I feel I need to reply to this one, as some of your concepts may bring harm to readers. I suggest you have more discussions with your mentor in the area of technical analysis. Even with the benefit of hindsight, I find your explanation very hard to accept. I'm not trying to discredit your effort, but I want readers to have a clearer understanding of this topic, and start to reason in their minds why price moves the way it does.

Everything is about probability and possibility. I'll just write something very different from what you wrote, and challenge readers to look at the same picture from various perspectives.

When the first candle closes below the uptrend line, there is a possibility that the trend may be coming to an end. This whole sequence of events should not be 'breakout strategy' where we expect a trend to develop, but 'end of trend consolidation'. The end of a up trend may not lead to a down trend, it simply means end of trend. The 'series of bearish bars' is due to the failed retest of the High + previous break of up trendline + some profit taking exit level for those riding the up trend. We can draw a Fib projection/extension and lookout for a short entry (to play a range and not a down trend). Because I'm drawing on your picture, I can only estimate the Fib levels visually, those are the exit targets, with the better reward/risk at the support level. Aggressive traders can short at the Fib entry level, while conservative traders can wait for the candle to close below the uptrend line to open short. 'The big long price action... bearish outside bar', please, bar reversal or candle reversal patterns are only found at the extreme end of the swings. That bearish action is not selling momentum, the fact is, there are no buyers at that price because everybody wants to buy at a better price (Support).

The price 'bounce' at my 100% exit marker is probably a partial close of the short positions. In the 'set-up' that I drew, the reward/risk is about 3, while your SL is placed at the 'neck line', a very popular price hunting area.

So now, without the benefit of hindsight, will you open a long position at your TP2? In veiw of the price support level, the MA, some possible Fib retracement level, the exit markers for the short sellers, the prevailing trend being up, and a very healthy reward/risk, I will TP the short trade and open a long position, with SL just below the price support and the 161.8% exit marker for the short sellers.

I've absolutely no idea what's going to happen next. All I can do is react, manage my risk, manage my positions, and know that the market is always right.

It's really quite pointless posting something that shows what you want to write. Why don't you write something before you place the trade, and then we can all observe the next day's price action and learn from you? That will be much more helpful to readers and subscribers.

I wish you no harm, and we can all learn and improve as a community.


"The first rule of forecasting should be that the unforeseen keeps making the future unforeseeable." - David McCasland (January 5,2012, Our Daily Bread)
Oct 31 2016 at 07:10
1 posts when you blow that leg up from that buy entry we want to enter at you can see how the higher highs and higher lows have created your trend up - for price to fall it will need to reverse and start breaking those buy orders and set up a precedence of where the sell orders are over taking the buy orders now
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