Breakout trades with Pivot points

When your trading day begins, on most days the currency price level is likely to be below the Pivot Point (PP), so you are more likely short the pair. Within the rest of the pivot support and resistance level, there will be channel formation and you are looking to break away from the channel.

In this situation you should sell your entry order just below the lower channel line and have a stop order just above the upper channel line, with the target as S1. While this is a good entry strategy do place stop-loss to mitigate risk.

Breakout of Resistance

In this strategy place an order just above the upper channel line and stop loss just below the lower channel. Your first target will be the pivot point (PP) line.

Now if you were trading more than one position then you would need to close out half your position as the market approaches the pivot line. You will also need to tighten your stop and then continue to watch the market action at that level. But keep in mind that sometimes the market won't ever stop and when that happens your second target can then become R1 and at that point what you want to so is close out the rest of the position at that level.

Advanced Strategies

In more advanced techniques pivot points are used in combination with moving average cross over indicator to confirm a breakout. The goal is to play around with your preferred set of indicators till you find the combination that works for you.

Find more of these techniques under the Forex Trading Strategies section.

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