Trendline breakout probably is the easiest trading technique. It can be profitable but if we don't careful, it also can kill our account quickly. There are many false breakout out there. The idea here is to find out the confirmation by adding some other indicators. Here I want to share a simple technique based on Trendline breakout with CCI cross zero line confirmation. This method can be used for both follow the trend or counter the trend. If you use this method for counter trend, you must be careful and make sure divergences already exist. Forget the breakout if there is no divergence.
Indicators:
- Bollinger Bands (20 periods)
- FXSniper CCI (standard setting) Download
- M15 timeframe or higher
Rules:
For buy, connect significant high and lower high on the chart using trendline. When price break your trendline, check if FXSniper CCI also cross above the zero line. Enter Long immediately. Exit when the price hit middle Bollinger or Upper Bollinger Bands. Or you can also use the opposite trendline breakout as the exit point (more profitable). Also, this Long position will be more powerful if divergence exist.
For Sell, Connect to significant lows and when the price break the trendline and CCI cross below zero line, go short. You can do this both follow or counter the trend. The exit point is the same as Buy.
Please note that all system has its own risk. If you follow the pattern, trade the right signal, exit at the right time, tight and discipline stop loss, I am sure this trendline breakout can be profitable.
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