Trend breakout forex strategies
Who’s online There are currently 6 users trend breakout forex strategies. Submitted by Edward Revy on December 15, 2008 – 12:23.
When price breaks through a trend line, how can we tell whether it is a true or a false break? Well, we can’t tell or predict until we see it later on. But, we can analyze what price has been doing prior to this breakout in order to form our own opinion and bias, and either pay attention to the breakout or disregard it. The market was in a downtrend. We drew a trend line connecting first two tops.
How can we know at that moment whether we could trust this breakout or not? The simplest and popular method is to wait till price returns back to test the strength of the broken trend line again. Then, if it holds, traders would say that a breakout is confirmed and enter either somewhere near the test point or when price advances through the earlier established breakout mark. After the break of a trend line price returns, tests the line again, finds support and, as a result, goes up. Yellow dotted line indicates the point of entry with a Buy order. BUT, this kind of re-tests don’t happen all the time.