9/9 Analysis: 4 Profitable Breakout Trades
Moments after the London market opens, we have 4 currencies to watch.
On the strong side, the CHF (turquoise line) and EUR (pink line) are moving up with a steep line to the far right which indicates current momentum in the market.
On the weak side, the AUD (orange line) and NZD (purple line) are showing the same thing heading down.
So unlike when we don’t have current momentum and place a pending order above or below the current price, we can enter immediately here with a market order.
- NZD/CHF SELL
If you entered at the point where we saw the momentum on our indicator, price went up over 40 pips from there before any pull back giving you a quick and easy breakout profit.
One other thing to note, the reason why it’s so critical to analyze individual currencies is because it opens up the entire market to you. How many amateur traders even look at the NZD/CHF pair?
When you watch the entire video analysis, I’ll show you 3 additional trades that were profitable today.
[00:00 – 04:47]
[slide] [lower 1/2 horizontal 8 charted currency lines on black]
Hello, this is James Edward from CompleteCurrencyTrader.com. Welcome to today’s Currency Strength Analysis training video. And, today, we’re looking at the London Market section. (I had some technical problems during the New York session, so I don’t have a recording of the indicator for the New York Open.) But that doesn’t matter because the London morning today has given us a perfect textbook example of, precisely, the kind of break-out trade that you should be looking for.
So this is what the indicator looked like, immediately at the London Market Open earlier today, and we have two very obvious currencies: the Swiss franc moving up to strength and the New Zealand dollar moving down to weakness. And what is crucial about this particular example is we have the momentum there. These two lines are moving more steeply in diversion, away from each other, exactly at the Open.
So, this is the kind of example that you could enter with at market order immediately, without using pending orders or waiting for the market to come to you. This is a good entry signal.
However, it gets much, much better. (So that is the Swiss franc against the N-Zed-D exactly at the Open.) But, if I move it forward by–
[slide] [further right on same lower 1/2 horizontally charted currency lines on black]
(continues) … just two minutes, we now have an even better example where the Swiss franc has continued to go up. And that momentum has really picked up. You also have the Euro doing almost the exact same thing, albeit not quite to the same degree, as the Swiss franc. And, then, down to weakness, you have the Australian dollar and the New Zealand dollar, both moving neo-vertically, (particularly the Australian dollar).
So you have four currencies there that are jumping off that indicator screaming at you, saying, “This is a momentum move. This is precisely the kind of move you look for at the Open. This is the reason why using a break-out strategy at the Open (because it reduces the amount of analysis you need to do).
You’re just picking the best strong and weak currencies and you are relying on that sudden burst of energy, just waiting for that new financial center to open, which is exactly what’s happened today London Market Open.
So you have two strong currencies, two weak currencies. (That give you a possibility of four different pairs that you could trade.) So, let’s go over to the chart–
[slide] [B&W vertical line NZDCHF.MS]
(continues) … at all four of those. This is the New Zealand dollar at 7 A.M. This is the 7 A.M. GMT, 8 A.M. London time.
This is precisely when the London Market opens and, from that, you can see the price went down almost 40 pips before there was any kind of pull back, so that would be a very easy break-out trade for your 20-pip profit.
The other option you had was the Swiss–
[slide] [B&W vertical line AUDCHF.MS]
(continues) … franc against the Australian dollar. This is the London Open Market price bar and, again, from the Open, [cross lines pinpoint] that price has gone down 40 pips before there’s any kind of pull back, and, even after that, it went down a third. And that’s gone [demos diagonal drop] on 71 pips.
Again, another profitable break-out, even if you’d not entered right at the Open, you’d waited for [pointing] this price bar to develop and you’d entered right at the close, five minutes after the Open, it’d still gone almost 30 pips.
[slide] [B&W vertical line EURNZD.MS]
Another option was the Euro / N-Zed-D. [indicates] This is the open price bar for the London session from the Open. The price has gone up a total of 81 pips on the Euro / N-Zed-D without any pull back at all.
[slide] [B&W vertical line EURAUD.MS]
And, finally, the Euro / Australian dollar again. This are the five-minute price charts. The 7 A.M., the 8 A.M.,–uh, 7 A.M. GMT, 8 A.M. London time. The London Market Open price bar and, from the Open, again, that price has gone up [demos diag line upward] in total of 65 pips with almost no pull back at all.
So, again, another very easy break-out trade that would’ve,–
[slide] [initial lower 1/2 horizontal 8 currency lines]
(continues) … very effortlessly, gotten you your break-out for this morning. So, there you have the textbook example of exactly the kind of trade that, ideally, you should be looking for.
You don’t need to force trades; the idea of this break-out strategy is, you are trading when there are obvious break-outs. (If you have to think about it too much, you’re probably making the wrong decision, and it’s a bad trade.) You should be waiting for absolutely, perfect, obvious conditions like this. They don’t happen all the time, but when they do, they are extremely-high probability trades because, once you get momentum like this moving the market, particularly, at a new financial centre Open, it is highly probable that that move is going to continue and push on, off the back of that momentum for at least the 20 pips that you are after.
You can see that our Currency Strength Indicator is an effective tool for picking out the highest probability, lowest risk trade set ups while avoiding market conditions that aren’t favorable. If you keep using this tool every day along with our daily Forex analysis, you will increase your win rate and be on your way to becoming a profitable trader long term.
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