Last Tuesday I told you I wasn’t going to trade any breakout in the EURUSD… Here Tuesday’s chart:
I said that I was going to wait for my signal AFTER the breakout because it was trading at The SF Box.
Anyway, the EURUSD broke both sides of the range.
Here is the chart:
See those two red boxes? The EURUSD broke both sides of the range and on both of them the market came back to the range.
This is why it was a bad idea to trade the breakouts
First, as I said in my previous post, the kind of volatility we are seeing in the EURUSD isn’t that good at all. It’s kind of difficult to trade when the it is retracing from random levels, there is no way to know where to place your SL, or your TP order, or even when to open your trades.
So you need to be careful and only take trades that have the highest probability and the lowest risk.
Second, and most important. You never take breakout trades when the market is trading around an important long term level.
The EURUSD its trading right now around an important LT resistance level (see the daily chart below).
So when do you take breakout trades then?
I’ve found out that the breakout trades that have the highest probability are the ones hat you take them when the market is already in a clear market condition.
You see what I mean? If you have any question, don’t hesitate to leave a comment.
Where is the EURUSD heading?
Well, I’m no magician and I rather wait for the market to tell me the direction than guess. But here is the daily chart, take a look at the pattern it formed (red box):
Based on that pattern with downward pressure, which also was formed at an important level gives us a an idea direction it might take…. What do you think?
Did you take the EURUSD breakout?
How do you determine when to take breakout trades?