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Hold the line - breakout FOREX strategy

by TFK6: This forex strategy is based on one of my most favorite entry methods. It takes advantage of something that cannot be hidden on masked. The results of struggle between the bulls (traders interested in upward movement) and bears (traders interested in downward movement). Each of the group has money in stake. They want market to move in their direction bad. At some occasions the struggle between them is clearly represented in the chart and may provide great entry opportunity.

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Ascending / descending triangle in trend. Those are two specific formations we will be interested in, we will look more closely on them in a moment.

Used forex indicators

MACD (moving average convergence divergence) 50,100,9: MACD histogram will be used to identify the trend without creating the clutter directly in the chart so we can focus on what we are looking for – specific triangle pattern.

Forex strategy rules

BUY

MACD histogram closing above zero – in positive values. This signalize ongoing uptrend. We will enter long trades only.

We will be looking for ascending triangle chart pattern. Triangle with horizontal upper resistance line and upward sloping bottom support.

This shows that bulls are able to push the price higher with each swing. All that bear manage to accomplish is to hold the line for a while.Considering the fact that according to most commonly used MA, uptrend is present in the market and bulls are winning the fight, we will enter trade long once the will of bears got broken.

This is shown on strong bullish (breakout) candle closing above the horizontal resistance line.

We enter the trade on breakout candle close. Stop loss should be placed below the low of a candle.

As take profit we should use the triangle width at its base.

SELL

MACD histogram closing below zero – in negative values. This signalize ongoing downtrend. We will enter short trades only.

We will be looking for descending triangle chart pattern. Triangle with horizontal bottom support line and downward sloping upper resistance.

Fundamentally this show that bears are able to push the price lower with each swing. All that bulls manage to accomplish, is to hold the line for a while. Considering the fact that according to most commonly used MA, downtrend is present in the market and bears are winning the fight, we will enter trade short once the will of the bulls got broken.

This is shown on strong bearish (breakout) candle closing below the horizontal support line.

We enter the trade on breakout candle close. Stop loss should be placed above the high breakout of a candle.

As take profit we should use the triangle width at its base.

ABOUT US

THEFOREXKINGS

“Trading FOREX since 2006. Full time trader and web developer since 2013. My two biggest hobbies are trading and web development. In TheForexKings I managed to connect both of them. Even after 12 years of trading I still have the same passion for the market as at the beginning. The aspect I enjoy the most : development and testing of new ideas.” 

 

Only in 2016 - 2017 we have created more than 400 forex strategies. During this period we have also developed and published +200 MT4 Expert advisors based on those strategies. We are dedicated to provide you with viable and complete trading systems that have thrived in extensive historical testing. We want to give you complete and transparent trading solutions, that once mastered ,will set you financially free. We want to give you a fighting and winning chance in the market. ” 

—  Marian, Proprietor of TheForexkings.com

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