Forex Strategy Video: EURUSD, S&P 500, AUDUSD - When to Trade Breakouts
• Breakouts are not breakouts unless congestion and range boundaries are cleared
• Preempting a breakout incurs the risk of being on the wrong side and a failure of follow through
Market conditions change, and our strategy should reflect those changes. We have coded the DailyFX-Plus strategies for Breakout, Range and Momentum to adapt to these market shifts.
Identifying technical patterns that are likely to lead into breakout scenarios - ranges, wedges, chop - is the easy part. Deciding when and how to trade these transitional situations is the real test. A range is a reflection of a speculative and/or fundamental equilibrium. It is easy for a spark to tip that balance in either direction - though the follow through may be limited depending on what is driving it and the bigger picture trends. That said, trading the actual break itself is the better approach than attempting to preempt. We discuss the strategy of breakouts in more depth and take a look at numerous setups (S&P 500, USDollar, EURUSD, AUDUSD, USDCAD, NZDJPY, GBPAUD) that fit the pattern in today's Strategy Video.
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