EURUSD Breakout signal and complete forex trading plan
Look, I’m going to be straight to you, there is no other way to get consistent results but having a trading plan.
You can get a thousand pip killer trade, but if you have no way to replicate the same results in the future, it wont help much in the long run.
Having a trading plan makes your life easier, helps you trade with less stress, which is what we all are looking for, aren’t we?
Having a trading forex trading plan is probably the most important factor to get consistent results.
It’s like having complete roadmap: where you need to go, what you need to do, where you need to stop, everything you need. This way, everything becomes much easier.
See it for yourself, what would be easier to you: to know exactly what you need to do, where to set your stop loss levels, where to take profits, etc. or to decide at the heat of the moment?
Which one will give you better results?
The first one right?
Ok, in this article, I’m going to show you how I create my own trading plan.
Step 1 – Trend of the market
The first thing you need to do is to determine the trend of the market. Once we know the trend of the market, everything becomes easier, because the only thing we need to do from there is to trade in the direction of the trend.
The best way to get it is by looking at the long term charts.
In the EURUSD weekly chart it’s clear that it was rejected from an important resistance level around 1.3417, so the EURUSD is likely to continue its way down.
Ok we are done, let’s get to trade… hehe, I’m kidding. There is plenty of work left to do.
Now we need to confirm this.
Step 2 – Analysis Confirmation
You can use the 4H or daily chart to confirm your analysis. Sometimes I use the 4H charts, some other the daily, I have no special preference.
Here is the daily chart:
In this chart its clear that the market is trading at an important support level around 1.3063.
Ok, so we know have two pieces of the puzzle:
- The market is likely to continue its way down
- Right now it is trading at an important support level
So we still need to answer: What the heck are we going to do with the EURUSD?
We know we are going to be looking for short opportunities (because it is in a downtrend, based on the weekly chart), but when?
We are going to answer that questions with the next chart.
Step 3 – Entry rules
To determine when start looking for short opportunities, we need to look at the short term charts.
Here is the hourly chart:
Ok, now everything makes sense.
I see that there is a very important short term support level at 1.2968. So I’m not going to look for short opportunities until the EURUSD breaks that level down.
What a minute, what did I just said?
I’ll look for short opportunities once the EURUSD breaks the bottom of the range… hey that is exactly what I was looking to answer right?
Step 4 – Forex Trading Plan for the EURUSD
Since the EURUSD has a bearish market condition, I’ll be looking for short opportunities.
I’ll start to look for short opportunities once it breaks the bottom of the range.
I’m going to use a breakout signal, but you can use what ever entry system or indicator you feel comfortable with.
Short order: 1.2944
Do you always trade with a trading plan? If you do, do you do something similar?
What do you think about my EURUSD trading plan? What about my breakout signal?