I do love divergence but my entry points are always confirmed by a trendline break. On this example I want to write my note about the trendline breakout trading. Trendline breakout can be very profitable if we stick to this method anytime. Like any other system, trendline breakout also comes with its fake out and loss possibilities. But, if we can manage our risk accordingly, I am sure you will be ended up in profit.
OK lets get started.
Basically, trendline breakout can be drawn in both directions, against the trend or follow the trend. See the example below.
On the chart above we go Long when price break the down trendline. The first next thing to do is to put the stop loss on your trade. Stop loss is very important and if we pay high attention to this stop loss and discipline, I am sure you will be success in trading. OK as you see on the picture below, the trade above provide about +180 pips. We can trail our stop, and don't have to put a take profit. Only STOP LOSS is needed.
OK on the next post I will show you how the breakout failed and we stopped out.
