The breakout trading system is back but this time it has a powerful pattern supporting it which makes this specific trade idea a 9/10 and those come around very rarely!
As I explained in the last post, I will be covering some basic education that is necessary to trade this or any other system. Today I will cover 6 general guidelines for professional trading.
1. Dream lofty dreams and as you dream so shall you become. Your vision is the promise of what you shall one day be, so make sure you set specific and high standards for yourself.
2. When in doubt get out, but make sure you doubt is real ( fundamentals + price action, don't follow your instinct (i.e nervousness). )
3. Be relentless is "intelligence gathering", get every bit of fundamental and technical information you can get. Then act on your trade.
4. Review the markets daily, this will help you to develop a feel for trends and market moves.
5. Sound and simple money management is crucial to successful trading. The best market analysis won’t get a trader to the bottom line , which is consistent profits , unless he has a sound money-management policy.
6. Limit losses and ride profits, irrespective of all other trading rules.
Thats it, these 6 points are good enough for today. Now lets move into this excellent trade idea that I found on USDNOK.
The move is worth a few thousand pips, but in reality the reward is just as big as a dew hundred pips on a major FX trading pair. Nevertheless, its worth it!
Before I explain the trade idea, here is a reward plan. (I will cover the risk plan in the trade idea).
If you open a 0.1 position the following can be earned on the 4 different TP levels.
TP1: 1160 pips / $140
TP2: 1965 pips / $230
TP3: 2765 pips / $320
TP4: 3570 pips / $400
By using pre market open prices the current logical SL would give you a rough 1 / 2 risk reward ratio, even though it is decent, it will be best to wait a little before getting into this trade idea. By a little I mean for the UK trading session to begin.
Anyway, plenty of taking and no action, lets take a look at the daily chart of USDNOK.
(click on image to enlarge)
As you can see on the daily chart, the Head & Shoulders pattern has been completed and we are currently at the final test of the neckline, which if broken will cause a big pip move!
It currently seems as if T3 or T4 can be hit easily so I will be targeting T3 and depending on how price action behaves till then, I might move my TP to T4.
I think a final retest of the white trend line could occur but it does not necessarily have to happen. As you can see by looking at the yellow highlighted area (8,000) once this area is broken we should witness a bullish run.
Lets move over to the 4-hour chart.
(click on image to enlarge)
The 4-hour chart also tells a bullish tale but it gives us better (clearer) entry signals. The 8,000 level is the 30% resistance area of the recent high and low but the 7,9500 area is the 60% bullish zone of the same pattern so I will be setting a buy pending order at this level and will look to enter manually if price heads above 8,000.
Now this is a breakout trade... as you can see the EMA and DC have been broken out of recently on the 4-hour chart, on the daily we are already above the EMA and DC which confirms the uptrend, the final confirmation came on the 20th of October when price action broke the system.
I think this is a really good trade and I am sure it will earn me very well in the new trading week!
Let me know if you decide to act on this idea too!
Remember that this Tuesday I will be hosting a workshop which is dedicated to this system so if you want to learn more make sure you enroll by pressing here.
Thats it from me folks! I wish you all an excellent trading week!