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Forex Breakout Trading Strategy

Discussion in 'Trading Strategies by SHIGERU (FX/TRADING MASTER)' started by SHIGERU, May 6, 2016.

  1. SHIGERU

    SHIGERU FX / TRADING MASTER Staff Member

    Forex Breakout Buy & Sell Strategy

    Difficulty Level: 4/10
    Time to read/learn: 15-20 minutes
    Profit %: 75-85%

    Breakout is one of my favorite techniques to trade the market with. It is actually a very simple strategy which just requires you to use your eyes to see.

    This strategy has allowed me and many traders to earn hundreds of pips in a SINGLE move and it's one of the easiest setups to learn and master.

    It does not need any indicator, but you need to know how to draw Trend Lines properly and see simple chart shapes.

    It doesn't just work for Forex... it also works for:
    • Commonly traded stock (E.g. Apple, Google)
    • Commodity (Oil, Soy Beans etc)
    • Indices (S&P500, JP225, HK40).
    Let me show you an example below starting with a SELL Example.

    Breakout Sell Strategy


    There are just 4 simple steps you need to do.

    Step 1. Look for "2 Hills"
    Step 2. Draw a Trendline.
    Step 3. Look for 'Action' Candle.


    STEP 1. Look for 2 'Hills' ʕ⊙ᴥ⊙ʔ

    You need to look for a shape which looks like 2 Hills.

    What does 2 hills look like?
    2 hills.jpg
    Two hills look like the above. Simple!

    But what you are looking for, is actually this shape.
    2hills-shape.jpg

    In the real market, you are looking for shapes that look like the ones below.

    2 Hills example 1
    h1.jpg

    2 Hills example 2
    h2.jpg

    2 Hills example 3
    h3.jpg

    2 Hills example 4
    h4.jpg

    2 Hills example 5
    h5.jpg

    Here is an Example of a "2 Hills" for currency FX:EUR/JPY

    eurjpy-sell-example.jpg

    Do you see the "2 Hills' in this picture?

    Let me show you :)
    eurjpy-2hills.jpg

    See it clearer now?

    Here is another example of 2 Hills for Apple (AAPL).
    apple.jpg


    Here is an example of "2 Hills" in Apple.
    apple2.jpg

    See it? I'm sure you do!

    In this chart, there are also SMALLER 2 Hills! Let me show you.

    apple-major-minor.jpg

    Interesting isn't it? There are 2 Hills appearing in a lot of places ^^

    I will show you a few more examples before you learn how to trade this strategy.

    Here is Stock:Google's Chart..
    google-1.jpg

    In this chart, we can see a few "2 Hills", even there is a triple Hill!

    google-2.jpg

    Here's an example for Forex: GBP/USD

    gbpusd.jpg

    One more example for Forex: EUR/USD

    eurusd-1.jpg

    This is for USD/JPY..

    usdjpy-plain.jpg

    And identifying the "2 Hills" shape in USD/JPY below...

    usdjpy.jpg

    I hope you are starting to see a clear picture now :)

    So now you know how to see "2 Hills" SHAPE in the charts!

    It will take you some time to get used to seeing it, but trust me - you will learn to spot them very quickly!

    STEP 2. Draw a Trend Line

    Once you have spotted the "2 Hills" shape, you need to draw a Trend-Line so you can find what is your 'Action Candle'.

    An 'Action Candle' is a signal for you to SELL.

    Warning! If you do not draw the right Trend-Line, you will not get the correct 'Action Candle' to know when to confidently sell.

    Drawing a Trend-Line is simple. You just need two 'Low' points in the chart.

    Let shigeru show you how.

    2. A) Identify 2 'Low' points.

    low-points.jpg

    2. B) Draw a Line connecting 1st 'Low' point to 2nd 'Low' point and pull it across.

    trendline.jpg

    That's IT!

    It is very simple!

    Let me show you a few examples on how to draw this Trend-Line.

    Remember we saw the "2 Hills" shape for GBP/USD?
    gbpusd.jpg

    Here we are drawing the Trend-Line for it.

    gbpusd-trendline2.jpg

    Here is another example for Stock: Apple.

    apple2.jpg

    Now we draw the 'Trend-Line" for Apple.

    appl-trendline-2.jpg

    We can also draw Breakout Trend-lines for the smaller 2 hills.

    apple-smaller-2hills.jpg

    This is how you draw the 'Trend-Line' for the smaller "2 Hills" Shape.

    apple-trendline2.jpg

    For Breakout Sell Strategy - Important Rules when drawing Trend Line

    Direction of the Trendline is VERY IMPORTANT. Do not get this wrong, or you will suffer :(

    trendline-direction-condition.jpg

    trendline-direction-condition2.jpg

    trendline-condition3.jpg

    trendline-graph.jpg

    trendline-condition5.jpg

    STEP 3 - Look for "Action" Candlestick


    "Action" Candlestick is what we consider in the chart also as 'confirmation'.

    Confirmation tells us this is a signal to enter a trade.

    For this strategy, an "Action" candlestick is required to appear UNDER the Trend Line.

    "Action" Candle must OPEN and CLOSE below the Trendline to be valid.

    breakout-action.jpg

    Here's another example of USD/JPY..

    usdjpy-breakout.jpg

    Here's one more example for EUR/USD..which shows 2 Breakout Sell setups! :D

    eurusd-breakoutsell.jpg

    Once the candlestick has appeared, it's a valid signal to take a SELL Trade.

    Try and see this for yourself...

    See how we get into profitable trades with this strategy in our Members-Only Section. We show you where to put your Take-Profit (exit the trade), and Stop Loss (if we are wrong). Most of the time we are right ^^

    In our Members-Only section, you can:
    • Study free strategy with SHIGERU
    • Use and configure our recommended free trading platform to see exactly how we trade.
    • See Breakout and Trading Setups that we post everyday for free
    • Learn our other free and very-easy-to-understand trading strategies!
    Click here and join shigeru and students - Get Free Access into ONEFXX Members-Only Area

    Breakout BUY Strategy
    Now buying is the opposite as the Breakout Sell Strategy. But this time, you should be looking at the opposite shape in the form of "2 boobs". Sounds funny doesn't it?

    I hope it helps you remember better :D

    STEP 1. Look for 2 'Boobs'.

    Breakout Buy "2 Boobs" Example 1

    buy-boob1.jpg
    Breakout Buy "2 Boobs" Example 2
    buy-boob3.jpg

    Breakout Buy "2 Boobs" Example 3
    buy-boob4.jpg

    Breakout Buy "2 Boobs" Example 4
    buy-boob2.jpg

    Breakout Buy "2 Boobs" Example 5
    buy-boob5.jpg

    Here are some real life examples of "2 Boobs" in the market..

    GBP/AUD

    gbpaud-plain.jpg

    How "2 Boobs" Looks like for GBP/AUD..

    gbpaud-boobs.jpg

    Another example..showing EUR/USD..

    eurusd-plain.jpg

    "2 Boobs" for EUR/USD

    eurusd-boobs.jpg


    Another example showing AUD/USD..

    audusd-plain.jpg

    "2 Boobs" for AUD/USD :)

    audusd-boobs.jpg


    STEP 2. Draw a Trend Line

    2. A) Identify 2 'High' points.


    trendline-buy-1.jpg


    2. B) Draw a Line connecting 1st 'Low' point to 2nd 'Low' point and pull it across.

    trendline-buy-2.jpg


    Simple!

    Let me show you some real examples for some of the charts you saw earlier.

    audusd-trendlineBO.jpg

    One example for EUR/USD ..

    eurusd-breakoutbuy.jpg

    And one more for GBP/AUD .. :D

    gbpaud-breakout.jpg

    Also this works for Stocks and commodities!

    An last example for Apple stock.

    apple-breakout2.jpg

    One of the Trend Line Conditions for A Breakout Buy..

    trendline-condition1.jpg

    trendline-conditionbuy-2.jpg

    trendline-buy-condition.jpg

    STEP 3 - Look for "Action" Candlestick

    "Action" Candlestick is what we consider in the chart also as 'confirmation'.

    Confirmation tells us this is a signal to enter a trade.

    For this strategy, an "Action" candlestick is required to appear ABOVE the Trend Line.

    "Action" Candle must OPEN and CLOSE ABOVE the Trend Line to be valid.

    See below example for Apple.

    apple-breakout-3.jpg

    Here's one example for EUR/USD

    eurusd-breakoutbuy-chart.jpg

    Another example for AUD/USD.

    audusd-breakoutbuy.jpg

    And another one for GBP/AUD.
    gbpaud-breakoutbuy.jpg

    Breakout Trade Examples

    Here are some Breakout Buy Examples (On Mobile)

    AUDUSD-BUY.png EURJPY-BUY.png

    EURUSD-BUY.png GBPUSD-BUY.png

    USDCAD-bUy.png USDCHF-BUY.png

    USDJPY-BUY.png

    Here are some Breakout Sell Examples (On Mobile)

    gbpaud-sell.png xauusd-sell.png gbpjpy-sell.png audusd-sell.png usdchf-sell.png gbpusd-sell.png

    Go Advanced!

    See how we get into profitable trades with this strategy in our Members-Only section. We show you where to put your Take-Profit (exit the trade), and Stop Loss (if we are wrong).

    We also teach you how to filter out Bad Breakout Setups using simple techniques.

    In our Members-Only section, you can:
    • Study updated and powerful, very-easy-to-understand strategies with SHIGERU FREE
    • How to use and configure recommended free trading platform for maximum results
    • See Breakout and Trading Setups that we post everyday for free
    Click here and join SHIGERU and fellow traders. Get immediate access into ONEFXX Members-Only Area.

    THANK YOU VERY MUCH! どうもありがとう!

    If you have enjoyed or learnt something from this tutorial, I really appreciate it if you can 'Like' this post, share this with friends on Facebook, or let me know your questions by replying below. I am here to help you.

    SHIGERU
     
    Last edited: Apr 23, 2017

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