Triangle Breakout (28/6/07) CAD +100pips

December 29th, 2007 expert Posted in FOREX TRADING ENTRY STRATEGIES, FOREX TRADING EXIT STRATEGIES |

ONLINE FOREX TRADING CONCEPTS: Price Formations,  Triangles,  Exit methods, volatiliy, Impact of spreads

The market had another below average volatility day yesterday. The “Looney” however created some movement which gave us a trade to talk about.

Very often a trade is entered into and we need to set a target for the trade. One of the guidelines one can use is the height of the formation (what ever the formation is) which preceded the price movement. Yesterday the CAD was trading in a triangle and a breakout was imminent.   If you are not sure which way it is going to break create both a sell and buy entry order and let the market decide. This is what we did and the price broke through the bottom support trendline of the triangle activating our sell entry order. Our stop was at the latest high in the middle of the triangle. Now where to put the target.

As can be seen we measured the height in the triangle at its highest point and then copied that below the triangle breakout point. This gives the expectation of the breakout and a guide to where the target should be. The trade worked out almost 100% perfectly in this respect and we banked 100pips.

Please remember to add your spread to any buy transactions. The exit in this case was a buy and therefore we could not place the target at the exact expectation level as the price would have to move past that point to activate the buy. Remember you are looking at the SELL price on most charts

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