How to trade forex breakouts Part 2: Downside Breakout
This is a companion piece to the first article dealing with support and resistance breakout trading: Pop ‘n’ Stop Trades. Since most of the principles involved are identical, I won’t cover that ground again, but simply show how the strategy also works for breakouts to the downside in forex.
To recap, this is a channel breakout trading system particularly useful around session open times, the simple rules of which I put together after studyingLondon breakout trading and other related strategies such as the New Yorkbreakout forex strategy.
The chart to the right shows price breaking strongly to the upside above a narrow range at the left. There were no entries possible on this breakout using the pop and stop method. Price did however form a very nice evening star candlestick pattern at the blue dotted line indicating the weekly pivot. Depending on what other confluences occurred at this level you could have entered a short trade after the first long candle down.