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. See our updated Privacy Policy here.

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
Subscribe
Please try again
Oil - US Crude
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
  • Commodities Update: As of 18:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.26% Silver: 0.06% Gold: -0.28% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/xg34ZjLjAj
  • Bitcoin breaking out of its recent range, now eyeing the June swing-high above $40,000 $BTCUSD #Bitcoin https://t.co/8MfaqkMqPn
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 93.89%, while traders in Wall Street are at opposite extremes with 74.76%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/hk6vYPBEYV
  • DAX broke wedge formation, testing March trend-line. CAC bias looking lower yet after initial bounce. Get your market update from @PaulRobinsonFX here:https://t.co/dXHmVE4Obi https://t.co/XpYDPg5MGn
  • New Zealand #Dollar Forecast: $NZDUSD at Technical Support- #Fed on Tap- https://t.co/pHDo3qmhTY https://t.co/fERBq6NBcD
  • Indices Update: As of 18:00, these are your best and worst performers based on the London trading schedule: Wall Street: 0.13% France 40: 0.13% US 500: 0.10% FTSE 100: 0.01% Germany 30: 0.01% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/YmRrQNJRUY
  • White House: - No sign yet that the Delta variant has had an economic impact in the US - Mask guidance to be determined at the local level
  • The final week of July brings forth a packed economic calendar – particularly for the US Dollar: June durable goods orders; July consumer confidence; the July FOMC meeting; and 2Q’21 US GDP. Get your market update from @CVecchioFX here:https://t.co/q7Clikv6M8 https://t.co/OzdmAFVW6X
  • There is a creep of uncertainty with the rise of the Delita variant and the slowing of the economic recovery. Our DFX analysts give you an updated analysis of the top opportunities for Q3👉https://t.co/wEineMCbzt https://t.co/G1wiOMlBRg
  • NY Fed accepts $891.20 billion in reverse repo operations $USD $DXY
3 Steps to Day Trade an FOMC Breakout

3 Steps to Day Trade an FOMC Breakout

Walker England, Forex Trading Instructor

Talking Points

  • Trading a breakout strategy affords many benefits when day trading.
  • Order placement can be aided through the use of Camarilla Pivots.
  • Learn to place stops and limits using support and resistance.

Trading intraday breakouts continues to be a favorite methodology for trading news events such as todays FOMC (Federal Open Market Committee) rate decision. While rate expectations are forecasted to remain the same, it can increase the possibility of a price breakout on pairs such as the EURUSD later this afternoon. Breakout traders will enjoy the advantages of having clear points of entry through the use of support and resistance, all while having the ability to trade the news with either market or entry orders.

Sound good? Today, we will cover a 3 step process to day trading the EURUSD using pivot points. Let’s get started!

Learn Forex: EURUSD 30Minute with Pivots

3_Steps_to_Day_Trade_an_FOMC_Breakout_body_Picture_5.png, 3 Steps to Day Trade an FOMC Breakout

(Created using FXCM’s Marketscope 2.0 charts)

Apply Pivot Points

While this first step may seem like a no brainer, it is important to add pivots to the graph so we can trade them! Camarilla pivots used in the example above, are available to traders through FXCMs Marketscope 2.0 charts. Camarilla pivots are designed to show key levels of support and resistance which can be perfect for identifying a potential Forex breakout!

When using Camarilla pivots for a breakout, traders should keep an eye on the S4 (support) and R4 (resistance lines). These areas are identified as market extremes and in the event that momentum pushes price through either of these levels, traders will want a plan of action to trade their favorite pairs.

Place Your Entry Orders

Once key intraday levels of support and resistance are found, trading a breakout is a fairly straightforward process. Traders will look for a strong continuation to the upside in the event price moves through resistance, prompting new Buy positions. Conversely, if price cracks S4 support traders will look to sell continued downward price momentum.

It should be noted that traders can execute a breakout strategy using entry orders, or by placing a market order. Market order traders have the luxury of being in front of the computer. This allows traders to enter immediately, or wait for a candle close for confirmation if preferred. Entry orders allow traders to set orders and walk away from their computer. If either S4 or R4 is broken, they will be ready to enter into the market at the best prevailing price. If you choose to trade with entry orders, consider an OCO order. This way, an entry to buy can be placed above the R4 pivot, and an entry to sell below S4.

Manage Risk and TakeProfit

As you can see breakouts can be an easy and effective way to approach short term trading the Forex market. However, it is important to note that false breakouts can and will occur! Traders should always prepare for price moving against their entry through the use of a stop order. The use of Camarilla pivots can also make the process of risk management easier.

In the example below, we have set up a potential breakout on the EURUSD above R4 resistance. A stop has been placed at R3, for a 20 pip stop loss. From here, traders can extrapolate a positive risk reward ratio of their choosing. Looking to gain more profit in a winning trade, limits are to be set at least 40 pips away from the breakout entry. This would setup a preferred 1:2 Risk/Reward ratio.

Learn Forex: EURUSD Pivot Entries

3_Steps_to_Day_Trade_an_FOMC_Breakout_body_Picture_4.png, 3 Steps to Day Trade an FOMC Breakout

(Created using FXCM’s Marketscope 2.0 charts)

Conclusion

Using a day trading methodology to trade breakouts can be made easier through the application of Camarilla Pivots. Remember that this strategy is broken down into 3 essential components and can be useful when the market approaches a potentially volatile economic event.

Following this 3 step strategy will allow for traders to identify and execute an easy to follow breakout strategy. The next part of the equation is to then determine your trade size. For more on that, follow this three step guide to determine your trade size.

---Written by Walker England, Trading Instructor

To contact Walker, email instructor@dailyfx.com. Follow me on Twitter @WEnglandFX.

To be added to Walker’s e-mail distribution list, CLICK HERE and enter in your email information.

New to the FX market? Save hours in figuring out what FOREX trading is all about.

Take this free 20 minute “New to FX” course presented by DailyFX Education. In the course, you will learn about the basics of a FOREX transaction, what leverage is, and how to determine an appropriate amount of leverage for your trading.

Register HERE to start your FOREX learning now!

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

DISCLOSURES