Trend Breakthrough Strategy

 

Trend Breakthrough Strategy

Breakout refers to a price that rises above the resistance line or falls below the support line. It is not easy to determine whether prices can break through resistance or support lines and maintain a stable trend. Trend breakthrough strategies pose many risks. False trend breakthrough signals are frequently seen, in which resistance lines, support lines are often tested once, twice, or even three times to attempt to break through the price.

As a result of this phenomenon, there are many reverse trend traders in the market. This is a strategy to earn profits when the trend breakthrough fails. If the trend breakthrough does not continue, and the phenomenon of returning to its original position occurs, there is a possibility of significant losses because the intensity is powerful and long-lasting. Therefore, traders will have to learn the ability to screen false trends for successful trading. This strategy finds spots in the trend through the daily chart and selects entry points through the time chart.

 

TRADING METHOD

 

BUY

 

1. When 14-days ADX is less than 35 and ADX is getting smaller, it signals that the trend is weakening.

2. Wait until the currency pair is at least 15 pips below its previous low.

3. Place a buy order on top of the previous day’s high by 15 pips.

4. When a buy order is executed, place a stop order within 30 pips of the entry price.

5. Clear the position when the price reaches 60 pips of the profit.

 

SELL

 

 

1. When 14-days ADX is less than 35 and ADX is getting smaller, it signals that the trend is weakening.

2. Wait until the currency pair is at least 15 pips above its previous high.

3. Place a sell order below the previous day’s low by 15 pips.

4. When a sell order is executed, place a stop order within 30 pips of the entry price.

5. Clear the position when the price reaches 60 pips of the profit.

 

  • There should be no major economic indicators scheduled to be released that could trigger unexpected changes in the market.
  • For example, the price could fluctuate from a steady market just before the announcement of the number of non-agricultural workers in the United States.
  • Also, the smaller the currency pair’s volatility and the narrower the range, the more appropriate it is to use this strategy.