Also known as an ABC structure, see the example below for how the strategy works. You’ll note that just after 11 am ET EUR/USD pushed higher once again to finally reach the intraday Average True Range target of 1.2927, which was then followed by a bearish divergence with the RSI oscillator just ahead of 12 pm ET. Finally, you attempt to manage this bullish or bearish bias by focusing on 1-, 2- or 5-minute charts and utilizing a combination of moving averages (13-sma, 144-ema & 169-ema) along with oscillators (RSI, Stochastics & CCI).
As a result, if this strategy has yet to achieve the Average True Range target on Monday, Tuesday or Wednesday of a particular week, then it may be sensible to pay close attention to this tactic on Thursday and Friday. Other factors to include are major news announcements as well as the time of day (when major markets open/close, option expirations, fixings, etc). If the Average True Range is achieved earlier in the week, the likelihood of it occurring twice in the same week is dramatically reduced. This strategy involves determining the expected price level at which you want to break, and then buying or selling at that price to reap the benefits. Generally, breakouts are used when the market is already near the extreme high or low of the recent past.
Estrategia de Day Trading
Ideally, if the price is struggling near these events (typically spotted by a bullish/bearish divergence with an oscillator), then it might be prudent to reduce the position size ahead of time. This type of approach may help to minimize the emotional aspect of trading since there’s an identifiable area to know where you’re wrong (the opposite side of the breakout’s high/low). As a currency trader, when volatility begins to pick up you usually want to be trading, not sitting on the sidelines.
When the market is trending and moving strongly in one direction, breakout trading ensures that you never miss the move. Look for a breakout of this range +/- 10 pips, or 1/10th of the daily Average True Range , to maintain above/below this level for minutes. This is an attempt to detect the direction of the ‘flow’ for the remainder of the day. This strategy typically focuses on EURUSD (Euro/U.S. Dollar), although it could be applied to any of the European majors. A Fib extension is a little different in that you are looking for the market to continue in a certain direction after a pull back in either both a bull or bear market.