Support & Resistance Breakout Forex Trading Strategy

The Breakout.ex4 indicator is unique. What it does is to draw support and resistance lines over a time period of 5 days.

Traders can then use these trend lines to either trade off the resistance or support lines, or trade the break of these lines.

For this strategy, we will focus on trading off the resistance and support lines.

Chart Setup

  • MetaTrader4 Indicators: breakout.ex4 indicator (default setting).
  • Preferred Time Frame(s): 15 minutes, 30 minutes, 1-Hour.
  • Recommended Trading Sessions: Any time. Depends on when the indicator signal appears on the chart.
  • Currency Pairs: any + gold & oil

Download

Download the Support & Resistance Breakout Forex Trading Strategy

Buy Trade Example (click the image for full size):

support-resistance-breakout-forex-strategy1

Strategy

Price forms areas of support and resistance. Usually many traders are unable to notice this because of the chart views they use. You will need to use the zoom – tool to condense the charts to actually pick out areas where price had previously formed a support or resistance.

With the Breakout.ex4 indicator, this is now very easy as the indicator draws a red line across a previous support and a green line across a previous resistance.

LONG ENTRY RULES

A long position is initiated when the following is displayed on the chart:

  • A red line appears on the chart. This is a previous support.
  • Enter long if price bounces off the red line.

Stop Loss for Long Entry:

A few pips below the red support line once the bounce has occurred.

Exit Strategy/Take Profit for Long Entry:

  • The Take Profit is set at the green resistance line (TP2) If the trader cannot wait for this landmark to be reached, the TP can be set at 3 times the SL (TP1).

SHORT ENTRY RULES

To initiate a short entry, trade as follows:

  • A purple line appears in between the green line and the red line. The purple line represents the previous resistance and is the landmark for our short entry.
  • Enter short if price is rejected at the purple line.

support-resistance-breakout-forex-strategy

Stop Loss for Long Entry:

A few pips above the purple resistance line once the price rejection has occurred.

Exit Strategy/Take Profit for Long Entry:

  • The Take Profit is set at the red support line. If the trader cannot wait for this landmark to be reached, the TP can be set to 3 times the SL.

Free Download

Download the Support & Resistance Breakout Forex Trading Strategy

About The Trading Indicator

The Breakout.ex4 indicator is a simple indicator which helps the trader locate areas of support and resistance.

The strategy constructed with this indicator requires a lot of patience for the price to get to its profit target. Typical waiting time is a minimum of 2 days or may even be as high as 5 days.

Therefore, only traders with the capital to take other trades while waiting for this strategy to play out to its logical conclusion should take on this strategy.

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