0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
EUR/USD
Bullish
Oil - US Crude
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Wall Street
Bullish
Gold
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Mixed
USD/JPY
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Heads Up:🇺🇸 Fed Kaplan Speech due at 14:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2020-08-06
  • After hitting a new two-year high of 1.1916, EUR/USD is now trading in the middle of today’s range at 1.1865 and needs a new driver to make or break the recent rally. Get your $EURUSD market update from @nickcawley1 here:https://t.co/EetZRs55q9 https://t.co/jxymBCa8rl
  • Indices Update: As of 13:00, these are your best and worst performers based on the London trading schedule: Wall Street: -0.14% US 500: -0.19% Germany 30: -0.30% France 40: -0.77% FTSE 100: -1.45% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/suRP72SApO
  • Heads Up:🇷🇺 Inflation Rate YoY (JUL) due at 13:00 GMT (15min) Expected: 3.4% Previous: 3.2% https://www.dailyfx.com/economic-calendar#2020-08-06
  • 🇺🇸 Initial Jobless Claims (01/AUG) Actual: 1,186K Expected: 1415K Previous: 1434K https://www.dailyfx.com/economic-calendar#2020-08-06
  • 🇺🇸 Jobless Claims 4-Week Average (01/AUG) Actual: 1,337.75K Previous: 1368.5K https://www.dailyfx.com/economic-calendar#2020-08-06
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 95.82%, while traders in US 500 are at opposite extremes with 76.11%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/8lwdCO7f8U
  • Forex Update: As of 12:00, these are your best and worst performers based on the London trading schedule: 🇬🇧GBP: 0.29% 🇯🇵JPY: 0.08% 🇨🇭CHF: 0.00% 🇦🇺AUD: -0.15% 🇪🇺EUR: -0.18% 🇨🇦CAD: -0.23% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/gpL0CBYyXO
  • Heads Up:🇺🇸 Continuing Jobless Claims (25/JUL) due at 12:30 GMT (15min) Expected: 16720K Previous: 17018K https://www.dailyfx.com/economic-calendar#2020-08-06
  • Heads Up:🇺🇸 Initial Jobless Claims (01/AUG) due at 12:30 GMT (15min) Expected: 1415K Previous: 1434K https://www.dailyfx.com/economic-calendar#2020-08-06
Broadening Patterns Can Help You Target Breakout Trades

Broadening Patterns Can Help You Target Breakout Trades

2013-03-08 19:00:00
Tyler Yell, Trading Instructor,
Share:

Article Summary: Breakout and Reversal price action patterns are very helpful to traders new and experienced. The reason for their helpfulness is that once a currency pair has shown its hand and taken the next step of continuing or breaking out, you can trade with very specific risk levels which are one thing every trader needs.

Broadening breakout patterns are easy to recognize because they can look like a megaphone with a broadening form on both sides or with one side broadening and the other side acting firm. The firm side will either be support or resistance and we’ll use the firm side to target breakouts. Naturally, support is seen when the lower price holds firm and resistance is seen when the top price holds firm like we see below on USDCHF.

Learn Forex: Specific Targets Make This Pattern Attractive

Broadening Patterns Can Help You Target Breakout Trades

The reason for the broadening aspect of the pattern is volatility. Each swing in the pattern is due to increasing volatility and the snap back is more violent than before until the pattern breaks. In a harmonic pattern, the chart swing highs in the broadening pattern will display a Fibonacci Extension of 1.27 to 1.61 of the prior swing but that is not required for the pattern to play out.

Trading the Broadening Pattern

There are two ways to trade these types of patterns. Each method has defined risk which is key and as always we recommend that you use appropriate trade size in relation to your account (free tool to help you keep your trade size in check). The two methods are trading either the Breakout of the pattern or the continuation of the broadening pattern.

Breakout Trading

When trading the breakout, like we see above, the trade is taken above a break of resistance or below a break of support. Currently, on USDCHF, we see a break above the resistance that has help since September of 2012. When price closes outside of broadening pattern and you see the following candle’s body completely above the pattern (Click Here for our FREE Candlestick Trading course with registration), then you are free to trigger the trade.

The risk point on breakout to the upside would be below the low of the last candle within the pattern. Likewise on a breakdown through support, the stop exit would be above the high of the last candle within the pattern. The profit target is nice and clean in that on a breakout trade, you take the largest swing low to swing high distance or pattern height and use that as your target from the breakout price.

Lean Forex: Trading the Swings within the Pattern

Broadening Patterns Can Help You Target Breakout Trades

A great trade with limited risk is present when price touches and bounces of a broadening trend line. This is where you can take advantage of the broadening pattern and the volatility that accompanies the pattern. The risk and reward are also well defined on the swing trade.

The risk or stop exit on a sell would be at the level of the highest high when the candle touched the broadening trend line and then moved back down. The profit target has two options, one conservative and one aggressive. The conservative option would be at the mid-point of the pattern and the aggressive option would be near the bottom of the broadening pattern.

The 5 Wave Rule & Broadening Failures

Broadening patterns often have 5 full waves to them but not always. Each swing is higher than the previous swing and that is why you’re presented with the megaphone type display. The key swing is the 5th swing because the pattern is well formed and you can catch the largest move with very tight risk

Learn Forex: Broadening Failures Still Provide Trade Opportunities

Broadening Patterns Can Help You Target Breakout Trades

A broadening failure takes place when price doesn’t complete the swing. This is a level where traders can look to exit because one way or another it is often hit. If there is a bounce off the mid-line, you’ll often see price retrace back to the broadening trend line.

A key aspect to trading this pattern well is staying flexible and keeping a strong risk: reward level. Trading this pattern doesn’t require many indicators but can help you catch nice moves.

Happy Trading!

---Written by Tyler Yell, Trading Instructor

To be added to Tyler’s e-mail distribution list,please click here.

If you’re still getting comfortable with the 4 Common Indicators, check out our FREE Twitter course here

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site.