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.

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
Bearish
Oil - US Crude
Mixed
Wall Street
Mixed
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
Bearish
USD/JPY
Bullish
More View more
Real Time News
  • Traders tend to overcomplicate things when they’re starting out in the forex market. This fact is unfortunate but undeniably true.Simplify your trading strategy with these four indicators here:https://t.co/A4dqGMPylo https://t.co/yZzArpGs2h
  • GBP turbulence persists as investors eye the next round of EU-UK Brexit negotiations. Cautious optimism signals a deal is near. Get your #currencies update from @JMcQueenFX here: https://t.co/WjU4oYpmf7 https://t.co/VcNnCjm0B2
  • An economic calendar is a resource that allows traders to learn about important economic information scheduled to be released. Stay up to date on the most important global economic data here: https://t.co/JdvW6HNuqV https://t.co/AiLoS7DrEQ
  • Many people are attracted to forex trading due to the amount of leverage that brokers provide. Leverage allows traders to gain more exposure in financial markets than what they are required to pay for. Learn about FX leverage here: https://t.co/3Wked6GBOp https://t.co/HicBmGrokK
  • There is a great debate about which type of analysis is better for a trader. Is it better to be a fundamental trader or a technical trader? Find out here:https://t.co/7kPzAoNoLG https://t.co/5lbyBJeeA7
  • Entry orders are a valuable tool in forex trading. Traders can strategize to come up with a great trading plan, but if they can’t execute that plan effectively, all their hard work might as well be thrown out. Learn how to place entry orders here: https://t.co/lAFyv1gM0P https://t.co/ubLimoYAcr
  • What is the outlook for financial markets ahead of the first presidential debate and how are Democratic nominee Joe Biden and President Donald Trump doing in the polls? Find out from @ZabelinDimitri here:https://t.co/QQwAZTxZFg https://t.co/4cRhRCiv3C
  • The US Dollar could gain as it forms bullish technical formations against the Singapore Dollar and Malaysian Ringgit. USD/PHP may have bottomed, will USD/IDR rise next? Find out from @ddubrovskyFX here:https://t.co/3UIKmbLIvD https://t.co/PY2YyH4vkQ
  • The Indian Rupee may be at risk to the US Dollar as USD/INR attempts to refocus to the upside. This is as the Nifty 50, India’s benchmark stock index, could fall further. Get your $USDINR market update from @ddubrovskyFX here:https://t.co/3wsYlSxd26 https://t.co/z2qB9p8IgX
  • A proxy of #EmergingMarket capital flows hit its lowest since July, falling with the #SP500 after some divergence This is as #USD gained against its developing FX counterparts, highlighting potential risk of a spillover outwards Stay tuned for next week's #ASEAN fundy outlook! https://t.co/kAvpnb0EXO
Prepare for the Next NZDUSD Breakout

Prepare for the Next NZDUSD Breakout

2014-10-08 19:00:00
Walker England, Forex Trading Instructor
Share:

Talking Points:

  • The NZDUSD has declined as much as 1129 pips
  • Price is currently consolidating this week
  • Traders can begin looking for a breakout

The NZDUSD has been one of the Forex markets strongest trending pairs, declining as much as 1129 pips over the past three months. However this week, the pair has begun to consolidate while failing to break to a lower low. This can be a strong clue that a breakout for the currency pair may be on the horizon. So today we will examine how to prepare for the Kiwi’s next big break. Let’s get started!

Learn Forex –NZDUSD Daily Trend

Prepare for the Next NZDUSD Breakout

(Created using FXCM’s Marketscope 2.0 charts)

Find the Swing High/Low

First, in order to prepare for a breakout, traders must identify a key line of support and resistance. This can be done through finding the current swing high and low on your chart. This step is important, because a breakout above a swing high will represent a bullish breakout. If price moves below an identified swing low, this would represent a bearish breakout. Let’s look at an example.

In a downtrend like the NZDUSD, the swing low will be the lowest price on the graph. This level is currently acting as a value of support at a price of .7706. From the low, we should move up the chart and locate the next highest price displayed. In this example the swing high is located at a price of .7926. Now, with support and resistance identified, traders can begin their entries for a market breakout.

Learn Forex –EURUSD Swing High / LOW

Prepare for the Next NZDUSD Breakout

(Created using FXCM’s Marketscope 2.0 charts)

Trading with OCO Orders

The key to breakout trading is to buy a currency pair when price breaks resistance, or sell if price breaks support. The easiest way to do this is by setting entry orders. Traditional entry orders will remain pending until the price selected is reached by the market. Then your trade will be executed at the markets prevailing price. This is a great way to trade but it can be difficult since traders can never be 100% certain which way the market will break until after the fact.

One way to tackle this is through the use of an OCO (One Cancels the Other) entry order. This allows traders to set entry orders on both sides of the market. Once set an OCO will trigger a buy position in the event that price breaks resistance, while deleting the pending sell order. If price breaks support, a sell entry will be triggered with the pending buy order deleted.

Prepare for the Next NZDUSD Breakout

Managing Risk / Taking Profit

Managing risk should always be a consideration when trading any strategy, and breakouts are no exception. In the event of a false breakout, traders should be prepared to exit the market as quickly as possible. One way to identify potential stop placement, is to set your stop order in between the identified swing high and low. Again using the example above, this would mean setting a stop near .7816.

From here, traders will also need to select a potential profit target. This can be done by taking a 1x extension of the distance found between the current swing high and low. This will allow traders to benefit from a positive risk reward ratio, by looking for twice as much profit relative to the amount of risk assumed through the setting of their stop.

Practice

Now that you are familiar with all of the components it takes to trade a breakout, it’s time to practice these techniques! To practice setting up OCO orders and managing risk, register for a FREE Forex demo with FXCM. This way you can work on your breakout trading, while trading the market in real time!

Click HERE to Register Now

---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