Why I’m not trading a EURUSD breakout

EURUSD

It’s always very important to perform an analysis BEFORE you start looking for trade opportunities.

Trading without an anlaysis would be like trying to get from place A to place B in an unknown city, without a roadmap… just following our gut feeling.

It doesn’t make sense does it?

Well, the same goes for currency pairs, if you do your analysis, then you can have your trading plan, you know what the market needs to do in order to start looking for trade opportunities…

Anyway… here is my trading plan for the EURUSD

EURUSD long term analysis

Its trading right in the middle of a possible range, but still, its trading at an important level, so it could go either way:

EURUSD Long term chart

Which way?

Hey, I’m no magician… but if we take a look at the short term chart, we’ll get an idea.

EURUSD short term analysis

It is trading in what I call The SF Box:

EURUSD Short term chart

I refer to the SF Box when the market trades around an important long term S&R level, and in the short term the market is trading in a very clear range… just like the one above.

It helps me create my trading plan:

I will only trade the EURUSD once it breaks wither side of the range, it doesn’t mean however that I’m going to trade the breakouts… what it means is that once the market breaks either side of the range, I will start looking for trade opportunities, in the direction of the breakout.

  • If it breaks the 1.3136 level for the upside, I’ll start looking for long opportunities
  • If it breaks the 1.3036 level for the downside, I’ll start looking for short opportunities.

Makes sense?

Why not trading a breakout?

There are two reasons.

  1. When the market is trading around the SF Box, we see plenty of false breakouts or fakeouts as some traders call them, and they transform in good range trading opportunities.
  2. The market, specially the EURUSD has been very volatile (the bad kind of volatility) in terms of breakout signals…

So I’d rather wait for a pullback to trade it…

Your turn

What do you think about my EURUSD Analysis?

What do you prefer: trading breakouts or pullbacks?

Let me know in the comment section.

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Raul Lopez

I've been trading the markets for more than 15 years. I believe the best way to trade is by adapting to the market conditions. You can learn it too, join our community .

  • Himanshu Dutta

    so do you mean you dont trade SF box breakouts??

    • Raul Lopez

      No, I dont, I only trade breakouts when the market is already in a clear market condition (e.g. bullish/bearish).

      Cheers,

      • Himanshu Dutta

        this is great !

  • Oh well, i am long optimistic, but havent seen a perfect set up, hope I’d get one on the 4 hr candle. From the daily candle, the whole set up gives me a bullish bias, but no entry point yet. I’d take a buy if i get a PERFECT set-up on d hourly chart though,

    • Raul Lopez

      Definitely agree with you… I’m also looking for a pattern on the short term charts to take my buy!

  • Oh, i Just stumbled on your site. Its quite encouraging
    i agree that the eur/usd has been badly volatile. I like your analysis cos its a waiting game. Hope to get a convincing pull back set up to the North soonest Oops, im awaiting a southward view on gbp/usd. Nice day

    • Raul Lopez

      Hey, thx for your comment!

      What do you think about the EURUSD? It just broke through the resistance level.

      I have it in a bullish condition, and I’m looking for long opportunities.

      We’ll see what happens!