Fade the break is a forex strategy
that follows the trail of the institutional traders,The purpose of
this strategy is catch the failure breakout for trading reversal.
Markets often reverse after a failure to break above the resistance
level or below the support level.
Time Frame:15-minute (M15) or 30-minute
(M30)
Currency pairs: majors.
Forex Indicators
No indicators are used for this
strategy. We use support and resistance levels only.
Strategy description
Buy
Steps for a Buy signal
1. Identify the support level.
2. Identify a candle that has a shadow
that goes below the support level.
3. Wait for that candle to close as a
bull candle. This is called the false- break candle. (See Figure 1 .)
4. Enter at the opening of the next
candle.
5. Set a stop loss of 5 pips below the
low price of the false break candle.
6. Set two profit targets for this
trade. Set the two targets at a risk to reward ratio of 1:1 and 1:2
respectively.
In the last Figire example, the stop
loss is 28 pips, the fi rst profit target is 28 pips from the entry
price, and the second profit target is 56 pips from the entry price.
From the long example in Figure 3 :
Entry price = 1.3090
Stop loss = 1.3062
Profit target 1 = 1.3118
Proft target 2 = 1.3146
The risk for this trade is 28 pips, and
the reward is 56 pips if both tar- gets are hit. The risk to reward
ratio is 1:2, which yields a tidy 6% return if we take a 3% risk.
Short Trade Setup
Steps for a Sell signal
1. Identify the resistance level.
2. Identify a candle that has a shadow
that goes above the resistance level.
3. Wait for that candle to close as a
bear candle. This is called the false-
break candle. (See Figure 4 .)
4. Enter at the opening of the next
candle.
5. Set a stop loss of 5 pips above the
high price of the false-break candle.
6. Set two profi t targets for this
trade. Set the two targets at a risk to reward ratio of 1:1 and 1:2
respectively. (See Figure 5 .)
7. In this example, the stop loss is 22
pips, the fi rst profi t target is 22 pipsfrom the entry price, and
the second profi t target is 44 pips from the entry price.
From the short example in Figure 6 :
Entry price = 1.5843
Stop loss = 1.5865
Profit target 1 = 1.5821
Proft target 2 = 1.5799
The risk for this trade is 22 pips, and
the reward is 44 pips if both tar- gets are hit. The risk to reward
ratio is 1:2, which yields a tidy 6% return if we take a 3% risk.
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