A steady declining trend has been observed in the currency pair EURUSD (EUR v/s USD), over the 14 months. This currency pair made its high at a level of 1.4938, in April, 2011. Now it has declined 2652 pips of its high level since, April, 2011.
When a currency pair makes it lower continues, in this position you can start looking for new breakouts in the trend’s direction, during active hours of the market. If you want to take an advantage of these movements in the market, it is important for you to understand the different characteristics of the market sessions. By this understanding you can do plan to take benefit of trading new breakouts.
I am going to take one hour graph of a currency pair EURUSD. I am utilizing a trade session indicator here. This trade session indicator will help you understand, precisely when breakout along with trend occur. It is important to note that the largest market moves usually occur during the New York or London market sessions.
We observe the one day market activity in the case of currency pair EURUSD. It has been observed during this one day market activity this currency pair moved 167 pips. When the Tokyo market session starts following this session, we observe that the same currency pair EURUSD moved 45 pips there.
Now you have information about the moves that this currency made in the early sessions. So, by using this breakout strategy, you may look for entering into a trade. You should primarily focus on your analysis about the markets, between New York and London trading hours.
It is usually happens, when volatility gets increased during the New York and London trading sessions, the traders start looking for the breakout trading in the currency pairs by utilizing different kinds of methods. In this situation, there is an easiest way to be available for you. You may use ‘principal channel’ indicator onto your graph, in this way, you can spot a possible breakout.
I have used ‘pricing channel’ for 55 periods and placed it on the currency pair EURUSD thirty minute chart. Now it is important for you, that you look for the present 55 period at 1.2518 low to be broken throughout the increased volatility.
It is recommended for you that, you trade the currency pair EURUSD on the breakout, when it establishes a fresh 55 period low. As far as stops are concerned, you place them above the last time high at, an above 1.2585 level. You may place minimum limits, that is 140 pip away for the sake of a clear ‘Risk Reward Ratio’ this is 1:2.
‘Price Channels are a very important indicator. They have been very beneficial for the currency traders. Therefore, you should load them into Market scope 2.0. If you want to know how DNC Price Channel can be added to your graph, full downloading instructions are available on the internet for you.
