4H Breakout Forex System is forex
strategy trend following that uses a breakout trading formation.
Time Frame 4H or daily.
Currency pairs: major.
Forex Indicators:
30 EMA, close,
150 EMA, close,
200 EMA, close,
365 EMA, close.
The 30 exponential moving average is
the trend indicator, when price is in trend it retraces to pull back
to the EMA 30 periods.
The 150, 200 and 365 exponential moving
averages are ynamic support and
resistance. . You will often get a
breakout formation after price has bounced off of one of these
moving averages. They are also very
useful as target areas for profit taking on open positions.
There are 2 types of breakouts that I
trade one is more reliable than the other, it is up to you if you
choose to trade both or not. The first is a trend line breakout see
diagram below for example.
Price is in a up trend and formed a
trend line against the trend. When the price broke out and come
back to the trend line giving us a good opportunity to buy in the
direction of the trend.
The second and more reliable setup is a
double top/bottom breakout. Double top/bottom are one the best
pattern formation for trading, see picture below.
Price is in an up trend and formed a
double top against the trend. Price then broke out and retraced back
to the trend line giving us a fantastic opportunity to buy in the
direction of the trend.
Rules 4H Breakout Forex System
1. Check the trend direction with 30
EMA.
2 Wait the consolidation market.
3. Wait for a break of the
consolidation (check also the volume that tends to increases.
4.Watch for a retrace back to the
support/resistance line that wasjust broken.
5. enter on the touch of the
support/resistance line that was just broken
6. Place your stop well behind the
support/resistance line.
7. Move your stop to break even after
you are in profit by the same amount you risked.
8. Stops can be trailed by a pip amount
or trailed manually behind bar lows in a up trend and bar highs in a
down trend.
Trade Examples
4H chart of the EURUSD
As you can see the above chart is in a
clear up trend, price is moving away from the 30ema and staying above
it most of the time indicating a strong trend. Once we have a clear
picture of the trend direction we look at support/resistance areas
for consolidation, this can be trend lines or horizontal lines for
double tops/bottoms.
On the above chart there is a lovely
upwards sloping trend, price is clearly above the green 30ema and is
consolidating below the trend line. If you look carefully at the
breakout on this chart you will see that price shot up then retraced
as the candle closed. On the opening of the next candle price took
off to the moon, lets checkout the lower time frame again.
Above is my current live trade on the
USDCAD, as you can clearly see the pair is in a downtrend and below
the 30ema.
This is a recent trade I took on the
EURUSD, a very clear double top was formed a while back and I have
had my eye on it ever since. After a huge drop off price fought back
and broke through the resistance created by the double top.
Above there is a perfect consolidation
forming above the 30ema with a trend line. Price broke out and I had
my buy order ready at the trend line but unfortunately price left
without me on board. This will happen sometimes and It’s a fact of
trading you cant win them all. Be patient because like busses there
will always be another one coming along soon.
In the picture t below is just after I
entered the trade, NZDUSD created a lovely double top in an up trend.
The double top was broken with a volume candle and then retraced back
to the support line triggering my order. I placed a 50 pip trailing
stop to lock in profits and a profit target chosen from the daily
chart if it gets that far.
Template Metatrader 4 with Watal Trend
line. The main feature of Watl trend line is that draw also the
historical trend line on the chart.
Below the link for download 4H Breakout
Forex System for Meatrader 4 with Watl Trendline indicator MT4
https://drive.google.com/file/d/0Bwjv2Pbf48itR2I3RXhabUJNZjA/view?usp=sharing
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