What constitutes a breakout?
November 10, 2005 by Trader Rich
A couple of weeks ago I mentioned that there was a right triangle formation in the EUR/GBP pair and it was only a matter of time before a breakout down would occur. Looking at the daily charts indicates that a little break occurred but what constitutes a full break? I really don’t know how to confirm the break only than to wait to see if the pair continues the downward path. Here is the chart I’m talking about:
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Depending on your time frame (daily in this case) you would want to see at least one bar close below the baseline. To get your entry, you may like to wait for the price to test the underside of the basline and place a SL above the last high? Your target at 0.6580 is calculated to be the length of the highest high to the baseline, projected downwards - 0.6900 - 0.6740 = 160 pips. There may be other ways of trading this setup and if there are … I’m all ears
Depending on your time frame (daily in this case) you would want to see at least one bar close below the baseline. To get your entry, you may like to wait for the price to test the underside of the basline and place a SL above the last high? Your target at 0.6580 is calculated to be the length of the highest high to the baseline, projected downwards - 0.6900 - 0.6740 = 160 pips. There may be other ways of trading this setup and if there are … I’m all ears