The idea behind this simple Breakout trading strategy is to capture an early move of the price when it starts to establish its new direction/trend for the day.
The idea behind this simple Forex tradinSimple Breakout g system is to capture an early move of the price when it starts to establish its new direction/trend for the day.
As we know the Frankfurt market opens at 2:00 am EST (which is 7:00 am GMT), then an hour later – London market opens at 3:00 am EST (which is 8:00 am GMT). The European session is the first major session for each coming day.
So, what do we do?
We start with 1-hour time frame, preferred pair – GBP/USD and no indicators.
The price range we are going to focus on is from 2:00 am EST to 3:00 am EST.
We look for the highest high and the lowest low of the price in that range and simply draw parallel horizontal lines through those extremes that will create a tunnel.
Now we are ready to move to a smaller time frame – 5-minute chart – and watch for the whole 5 min candle to close outside the tunnel which will provide a signal for us to enter with the open of the next candle.
We use the other side of the tunnel for stop loss
For TP, we use the size of tunnel as TP1 and double tunnel size as TP2.