Price Action System–morning break out
Forex Spread betting
There are many morning break out strategies you will find on the web. I have fount this one to be the most effective.
Time frame: 30 min
Tag: EURUSD
Indicators used : None
Charts used: EURUSD
Type:Trend Trade
Timeframe of trade: Day trade or Swing
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This strategy is very simple, but an advanced spreadbetting strategy as you do need a some trading experience. Look for the overnight range on EURUSD. The optimal setup is when the rage is under 1/3 of the average range and that the overnight range is either in the upper half or the lower half of the previous day’s range.
The overnight range is considered between 20.00 and 8 am UK Time(when the UK stock market opens). soon after the opening you will have big players come into the market and they will push the price in one or the other direction.
Wait for a break out of the overnight range. When there is a pull back towards the range, enter the trade in the direction of the pull back. Look at the example in Spreadbetting example 1:
In the Price action system above. The overnight range was between 1.3307 and 1.3268 . 39 point’s which is roughly 1/3 of the average range of EURUSD. This range formed near the low of the previous range. In the example above there is not a real pullback into the range but there is a strong pause at 1.3250. This pause is considered a pullback in price action.
Above is another Forex spreadbetting example of the morning break out strategy. In picture above, the price action has a retracement in the morning back to the resistance line that has become support. This is where you enter the trade.
You only trade one trade a day, on the optimal setup. If you are a more aggressive trader you could use a stop and reverse strategy.
Exit Rules:
Your profit target is 2/3 of an average day range or target of one full day’s range if you would like to keep it overnight.
Your stop loss is the middle of the overnight range. If after the breakout the trade falls back into range crossing the middle of the overnight range. There is a greater chance that the trend will be in the opposite direction, to the current breakout. Therefore this is your stoploss are.
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