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Friday, September 23, 2011

Selling breakouts

Hi fans of market trend analysis. Today I just wanted to talk a little about selling breakouts of support levels. I will take gbp/usd as an example. You can see that the pair has been falling for almost a month and is close to very important support now. You can also see that the pair reversed today and this may signal the bottom in the pair. But the pair has been falling and you can see in the chart how you could have successfully sold support breakouts on a number of occasions. 

You could have taken the first short position at 1.6355 level, right after the pair formed a peak at resistance of around 1.6600 level. As the down trend progressed one could have gone short at 1.6211 (not a perfect short example), then at 1.5900 level and finally at 1.5700 level. As always, it is best to wait when the pair starts ranging after a move and forms some kind of a bottom. Then one could wait for the bottom to be broken and sell a breakout when it occurs. I usually say that Asian sessions are for ranging and European and American ones for breakouts and trending. 

Do your own analysis about it and you will see. Hope you enjoyed this short post.

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