10 STEPS TO ANALYSE AND TRADE BREAKOUTS ( AUDUSD)
Breakouts and Breakdowns are one of the most efficient ways of trading and analysing the financial markets. It is a stratedgy, if well understood, can be applied over various asset classes from high cap stocks, low cap stocks, currency majors, futures, cryptos etc.In order to use this stratedgy, you have to be able to read the tell tale signs left behind by big institutional traders i.e Big investment Bank, Hedge funds etc. Breakouts are quite simple yet not easy. We will begin by analysing pre-breakout characteristics and what to look for and then how to position oneself to rip potential profits from the market.
1. The market will start off by going into a consolidation / range setup.
2. If you trade advanced patterns, you can take out your fibonacci tools and look for a potential C to D completion.
3. Wait for formation of tight range setups next to the large range: This indicates that large market players are showing increased interest in either buying or selling this market, depending on market condition (Bullish or Bearish) and the tight range will form because they are trying to protect their position. Bear in mind, these are well trained chartists and traders who will try to invisibly move the market by trading small amounts of large chunks of money with the aim of their intentions not being noticed.
4.After that you want to see increased volatility in the market; larger candle sticks forming after the preceding candlesticks indicating liquidity is currently high in the market
5. Once price breaks through support or resistance level, you will want to go long or short in this market depending if we have a breakout or a breakdown, for our case we have a breakout on the AUDUSD pair and a potential countertrend trade / reversal.
6. Good breakouts come with potential slippage;difference between the intended and actual execution prices in a trade. Slippage is not bad thing, it indicates that the trade is moving in your favour and that momentum is high in the market. Look at it as a cost of doing business. Good slippage however, is not good. If you are buying at 20 dollars but then get filled at 19.50 dollars, it means someone else was willing to sell you their position at a lower price and that selling pressure might be accummulating.
7. Set convectional targets, looking left at key support/ resistance area
8. You can also use Relative Strength Index, Moving Average Convergence Divergence and or other tools to clearly define your entry
9. Conservative traders can wait for a retest of a double top or double bottom for confirmation. Respect even handle numbers.
10. Manage your risk ( 1% to 3% )
For further clarity send me an email: augustinekiama@gmail.com and also join our institution at Sava Institute of Forex Trading and get to learn more.
1. The market will start off by going into a consolidation / range setup.
2. If you trade advanced patterns, you can take out your fibonacci tools and look for a potential C to D completion.
3. Wait for formation of tight range setups next to the large range: This indicates that large market players are showing increased interest in either buying or selling this market, depending on market condition (Bullish or Bearish) and the tight range will form because they are trying to protect their position. Bear in mind, these are well trained chartists and traders who will try to invisibly move the market by trading small amounts of large chunks of money with the aim of their intentions not being noticed.
4.After that you want to see increased volatility in the market; larger candle sticks forming after the preceding candlesticks indicating liquidity is currently high in the market
5. Once price breaks through support or resistance level, you will want to go long or short in this market depending if we have a breakout or a breakdown, for our case we have a breakout on the AUDUSD pair and a potential countertrend trade / reversal.
6. Good breakouts come with potential slippage;difference between the intended and actual execution prices in a trade. Slippage is not bad thing, it indicates that the trade is moving in your favour and that momentum is high in the market. Look at it as a cost of doing business. Good slippage however, is not good. If you are buying at 20 dollars but then get filled at 19.50 dollars, it means someone else was willing to sell you their position at a lower price and that selling pressure might be accummulating.
7. Set convectional targets, looking left at key support/ resistance area
8. You can also use Relative Strength Index, Moving Average Convergence Divergence and or other tools to clearly define your entry
9. Conservative traders can wait for a retest of a double top or double bottom for confirmation. Respect even handle numbers.
10. Manage your risk ( 1% to 3% )
For further clarity send me an email: augustinekiama@gmail.com and also join our institution at Sava Institute of Forex Trading and get to learn more.