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Breakout Strategy - Forex ” Reversal ” Breakout Strategy On The GbpUsd

In this post, You’re going to learn the exact same “Reversal Breakout ” strategy which I used to nail 130 Pips on the GbpUsd.

( Without using any technical indicators at all…! )

Reversal Breakout Strategy

Reversal Breakout Strategy

Nailing successful trade like this in the 130 - 150 Pips range can be considered rather hard for many traders…..

If You’re also thinking this way and still struggling to even achieve 100 pips in a single trade..

Then this strategy that I am sharing below can really benefit You tremendously….

( Especially when NO technical indicators are needed at all….) * smile *

To sum up what this strategy is all about…

It is a very common ” Reversal Breakout ” strategy which happens in the market often….

Normally after a very strong trend..

Read on below for my step-by-step explanations….( and my earnings proof as well )

To make it easy for anyone to understand how I analyzed the market for such ” high probability ” set - up..

I will break them up into 3 simple steps ….( with illustrations )

—————————————————————————————————————

They are namely :

Step #1 :  The Overview Of This Set - Up To Go ” Long/Buy “…

Step #2 :  When Is The Best Time To Get Into The Trade For ” Minimum Risk “….( tighter Stop - Loss )

Step #3 How To Calculate The ” Appropriate Profit Target ” To Aim For…

—————————————————————————————————————-

3 simple steps….that’s about it…..nothing more complicated….

Once I explained to You how I analyze each step…

…..You Will find it very easy to understand then too…

( Of course it also means that Your trading knowledge has been enhanced at the same time ! )

With much further ado…..let’s get into the main steps..

Step #1 :  The Overview Of This Set - Up To Go ” LONG / BUY “….

It is a fact that nothing is 100% guaranteed in any trading business…

This includes Forex Trading as well…

Thus……in order to derive our Buy / Sell decision…

We need to extract ” hints or signs ” from the market using technical analysis through charting… ( can even combined with major fundamental news )

The same goes for this strategy too…

In this strategy….I am taking advantage of 2 ” natural behavior ” of the market to help me conclude this decision to go LONG..

Both are ” Bullish ( up-trend ) ” patterns indeed…

And they are :

1) Double Bottom Formation….

2) Triangle Breakout Set - Up ( Up-ward )

These are very common patterns which are not new to any traders I am sure…

But using & interpreting them ” correctly ” is the real key here…

Most importantly….

Using JUST ONE of these 2 is not good enough

BUT…..combining these 2 patterns together…..the winning probability is enhanced by another 70% at least…

Bottom line is…..the more such ” proven patterns ” You can grab from the market….

The higher the probability of winning….

So how did I derive the ” BUY ” decision to calculating the appropriate stop - loss and take profit to use …..then ?

Let’s get into that now….

How I Derive My BUY Decision Based On The 2 ” Bullish ” Patterns…

This Gbp/Usd pair has been on a strong down - trend for the past few weeks…

In the currency market….whatever goes down….must come up….that’s a fact.

And vice versa….

This explains why You see a ” Major Reversal ” after a strong trend very often….

( Perhaps You even get caught up in one before ? making You frustrated …)

The Gbp/Usd has plunged to a point where it formed a ” double bottom ” pattern…

Important Note : After the 2nd bottom…..note the ” Strong Bullish CANDLE ” straight after…

This is the very first sign of an impeding bullish reversal..

…..And we have to confirmed with more ” hints ” from the market to reinforce our bias of course…

( This is trading on the 1 hourly time frame )

Forex Reversal Breakout Strategy

Forex Reversal Breakout Strategy

The price climb very ” fiercely ” upward after the 2nd bottom…

But this is NOT good enough for us to enter yet…

Some traders might jump in straight after seeing the double bottom…

But I personally like to ” gather at least 2 hints ” from the market first before jumping in…

This makes me a more conservative trader…

And of course…..over time I would enjoy more winning trades….* smile *

OK….one ” pattern ” is not good enough to get into the trade..

What’s the 2nd ” hint ” we need then ?

It can be anything as long as it supports our ” BULLISH ” bias…

And indeed ……after some waiting…

The price forms a ” Triangle ” pattern….. ( which is a BREAKOUT set - up ! )

This is considered one of the best set - up ….in fact..

Because it would lead to ” massive movements “  ( more pips to be grabbed ) in the market normally…

And the risk ( stop loss ) we need can be very tight…

More on that in step #3….

Let me show You the ” Triangle ” set - up for now…

Forex Reversal Breakout Strategy

Forex Reversal Breakout Strategy

Now that the ” Triangle ” formation is formed in the market…

It doesn’t mean that we are right about the ” Up - Trend ” bias….

We need to at least wait for the price to ” Breakout to the up-side “ first…..in order to confirm our Up-Trend bias…

If the price breakout to the down-side instead….then there would be no trade of course..

Rather play it safe than to go in with ” guessing ” mindset…..and lose our precious capital for nothing right…?

Ok….as You can see it too from the illustrations above…

The price did went rather smoothly and ” breakout to the up-side “…

The ” full body ” of that candle is another important hint that the ” Bull Power ” is strong…

Let me explain in more details below..

Forex Reversal Breakout Strategy For GbpUsd

Forex Reversal Breakout Strategy For GbpUsd

Do You see the flow here…?

From a Double Bottom……to a Triangle Breakout….showing a Very Bullish Candle

With these 2 ” hints ” present….it is definitely good enough for me to enter at that position for my LONG trade…

Yeah…..the price I entered for a Long is at 1.6044…

And it is for the Gbp/Usd..

Do You also remember that earlier I did mention a ” Triangle Breakout ” is one of the best set-up I like to trade…?

Reason is that it enables me to use a rather ” tight stop loss “…..( low risk trade )

But the reward can be fairly large…..as a Breakout normally leads to massive movements.

With that….we shall proceed to step #2 !

Step #2 :  When Is The Best Time To Get Into The Trade For ” Minimum Risk ” ( tighter stop loss )….& Maximum Profits

With a ” Triangle Breakout “….placing the stop loss is really very simple..

For this case…we just have to place it under that ” Bullish Candle ” ….that’s it.

Why so…?

The Price has ” Breakout ” …..and normally it would NOT return to that position again if we are right about the direction..

Very simple logic here….and it is proven too after years of trading breakout for me….* smile *

For this trade…I place the stop loss just below at price 1.5980  ( for 64 pips stop loss )

If at this point You think 64 Pips is too much….

Then once You see what kind of Profits Target we can aim for…

You would probably think 64 pips is indeed a very ” tight one “….* smile *

Forex Reversal Breakout Strategy For GbpUsd

Forex Reversal Breakout Strategy For GbpUsd

Alright….having settled the stop - loss…

I shall show You how to calculate what is the appropriate ” Take Profit ” one can aim for such strategy….

That would bring us to step #3 ….( which is also the last one )

Step #3:  How To Calculate The ” Appropriate Profit Target ” To Aim For…

Having seen all the ” hints ” that we need in order to enter into a BUY trade…

The probability of all the trade going up-trend is somehow very high now..

So the main thing to do is to decide on an ” Appropriate & Realistic Profit Target ” to grab from this upward momentum..

So how do You do it ?

Here’s how..

We will measure the distance between the ” double bottom & highest price before the breakout “ as a gauge…

And why I use such method to gauge appropriate profit target then ?

You might be wondering….

Very simple logic here..

The previous downtrend ” stalled ” at the Double Bottom location..

And the Price climb ” fiercely ” upward until the TRIANGLE formation…

The distance is already good enough for us to tell that the ” Buying Force ” in the market is strong enough..

So the ” Probability ” of the market moving a Proportional distance after a BREAKOUT is equally high

But am I going to aim for the max distance hoping to grab maximum pips ?

Of course NOT…..

That’s is too risky and not realistic

It would be much better if I aim for a Profit Target within that distance and less ..

In this way……it would be much easily hit….

( Locking and keeping the pips in our account first is more important than anything…..agree ? )

Ok….so what is the ” safe ” profit target I can aim for this case..?

See below for illustrations :

Forex Reversal Breakout Strategy For GbpUsd

Forex Reversal Breakout Strategy For GbpUsd

Aiming just 130 Pips out of the projected 274 Pips range…

That’s less than half the ( maximum calculated ) distance..

Which makes this 130 pips Profit Target more achievable and realistic after all..

Well….some traders would want to go for maximum pips…..

But for this trade….I would just settle for 130 Pips and keep that profits first…

Note : For most of my intra day ( short term ) strategies….I would normally aim for 100 - 150 pips for most set-ups.  And it has been giving me very high winning % so far…

If  let’s say the trend is still going strong after I profited…I can still enter during the ” dip ” too..

And that’s when I would deploy my ” trending ” strategy to ride the trend ….( provided it has already established using my checklists )

…..although I am only aiming for 130 Pips out of the projected 274 pips…

I would still make it an effort to ” reduce my risk further ” for this trade..

How do I do that ?

Very simple…

I will ” shift my stop loss to breakeven ” once the trade goes in my flavor for 65 pips..

Why 65 pips then…?

This is the risk I ( stop loss ) I set for this trade remember…?

Most of the time….I trade in this manner..

Once the trade goes in my flavor…I will either lock in some profits…

….Or shift my stop loss to break-even..

At least I would not see a winning trading turning into a losing one….

( Very IMPORTANT In Any Trading Business….Reduce Risk & Protect Profits ! ….Agree ? )

After a few hours of trading…

The 130 pips Profit Target ( TP ) was hit as the price 1.6174…

Forex Reversal Breakout Strategy For GbpUsd

Forex Reversal Breakout Strategy For GbpUsd

Using this ” reversal breakout ” strategy purely based on Price Actions + Patterns Formation…

Grabbing profits in the range of 130 - 150 pips can be considered simple…

I usually only trade the 1 hourly…4 hourly & daily time frames.

Reason being is that these time frames give me a much ” reliable and accurate ” market & trend analysis..

130 Pips for this trade netted me a nice Usd $1,297.87 profits…. ( trading 1 standard lot )

Here’s the earnings screen shot with the BUY Order, Stop Loss & Profit Target to share :

Forex Reversal Breakout Strategy

Forex Reversal Breakout Strategy

From the earnings proof…..You can see that the S/L has been shifted to ” breakeven ” price at 1.6044…

This was done when the price has moved 64 pips in profits  ( like I mentioned earlier above )

Doing so allow me to ” reduce risk further “……as I definitely do not like to see any winning trade turning into a losing one.

( Don’t think any traders like it in fact……keke.)

That is not the end of the story ….

You know what happens to this Gbp/Usd trade after I profited the 130 Pips Profits ?

Check it out :

Forex Reversal Breakout Strategy For GbpUsd

Forex Reversal Breakout Strategy For GbpUsd

The Bullish Force is still very strong…

And move up for another 400+ pips…

Definitely a lot of valuable Pips ( Profits ) for You to grab from such ” Reversal Breakout ” set - up..

And the best thing is that it ” always happen ” after a strong trend..

The fact is that the price would not continue to climb forever…

Neither would it drop forever… ( unless the entire country gone burst ! )

It has to ” reverse ” at some point…

So using simple proven ” high probability ” patterns such as the Double Bottom….( or Double Tops )…
You can almost anticipate for a ” reversal ” soon..

Of course…like I mentioned earlier…..One is Not Good Enough….Not Confirm Enough…

You need at least ” 2 such proven patterns ” …..to be sure of Your bias…

Best is….if You can spot a ” Triangle Pattern ( or any breakout set up ) ” in the market….after the first move…

As this would tell You that another ” Breakout ” would be following..

And it also implies there would be ” Massive Movements ” in such breakout..

Also means….Lots of Pips ( Profits ) for You to nail too…

Just remember what I told You about ” Locking Your Profits ” as the trade progress alright ! * smile *

With this…..I shall conclude this ” Reversal ” Breakout strategy that I want to share in this post..

This would not come daily…..

But at least when a strong trend has been prevailing for sometime already…

You can almost ” get ready ” to spot for such Reversal Breakout…

Even if You’re not confident to trade with LIVE money yet…..( still on DEMO trading )

But at least  when You’re mentally prepare for such ” Reversal Breakout ” situation…

You WOULD NOT get Caught in it…..right ? * smile *

Trading both a ” Breakout or Massive Trends ” can be really very Profitable..

This is due to the fact that the market normally ” moves a lot in one direction”…

Any anyone ( including Yourself ) can really grab 100 - 300 pips in a single trade riding on them..

No joke here…as I have been trading only ” Breakout & Massive Trends ” for years now…

And the best time frames to spot them are the 1 hourly….4 hourly and daily…

So I literally do not have tosit stay glue ” at my PC the whole day…

I just have to peep once awhile…that’s all… * smile *

While having more free time to enjoy my own activities and accompany my love ones..

If You’re not yet trading either a ” Breakout or Riding The Massive Trends “…
>Perhaps it is time for You to include them in Your strategies basket now..

Why settle for just 10 - 20 Pips…

When You can confidently grab 100 - 200 pips using lesser them right ?

Ok…so much for this strategy..

I sincerely hope You have learnt something here

And soon You can also trade such ” reversal breakout ” set up confidently too.


 

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