How to trade a breakout of the level?
Trade breakouts in the Forex market is dangerous due to the fact that very often there are false breakouts that are triggered at the statistics more often. It is therefore essential to understand the structure of the market and observe the price movement to the level.
Markets always move in cycles: the trend period, followed by a consolidation phase. The longer the market remains in consolidation, the stronger will be its breakout and subsequent trend.
Not one you notice periods of prolonged consolidation. Traders around the world see the same thing. Some of them will trade the bounce from the level, and some breakouts. If the price at least for some time to secure for the resistance level, many bears will work the feet, and many bulls will open a new position to purchase. Therefore, after longer periods of sideways price movement is often explosive flies in the direction of the breakout, forming a strong trend.
The strategy trading of breakouts has several ways of entering the market, you have to choose the one that best suits you.
Below are examples of consolidation of 10 months and 3 years.
To be continued