Breakouts in the Forex Market

Breakouts begin to form on our skin when we are stressed, pores are clogged, or our bodies carry an infection. They mostly appear where our skin has the highest concentration of oil glands. 

Oh, my bad! We’re supposed to be talking about breakouts in the Forex Market, not skin breakouts.

Breakouts occur when price suddenly breaks out of an area of consolidation. Traders expect to see them when price has been consolidating or ranging for a long time. A breakout can also form when price breaches certain levels such as support/resistance, pivot points, moving average prices, or Fibonacci levels. Whenever we are trading breakout set-ups, our goal should be to enter the market at the best price possible. We want to ride with the trend until there is no more volatility left. Breakouts help us identify new trends or catch an existing one when it resumes from a period of consolidation. This is pretty simple and interesting, right? 

Where to find Breakouts

• Support and Resistance
• Price Highs or Lows
• Price Channels
• Pivot Levels
• Round Numbers
• Chart Pattern Levels

If you think that we are just about to dive deep into some form of a complex mathematical formula, you’re wrong! Breakouts are quite simple to learn and apply in your trading!

There are three types of breakouts in Forex, but you’ll only need to know two of them in your entire trading journey.

1.Trend Continuation Breakouts

2.Reversal Breakouts

You don’t need to have an entire library of books to start using this excellent strategy. Now let’s take an extensive study of each of them.