Breakout level: traded the most profitable setups
You trade the break of the level? If Yes, then you know that a good deal on breakdown can generate substantial profits. However, trading breakouts can often be unprofitable.
For example, you notice that the price breaks the resistance at large bullish candle, so without hesitation you open a trade in the long. However, after some time the price makes a sudden 180-degree turn, and you find yourself in the red. Now you're probably wondering, "What transactions breakdown will be successful and which not, and whether it pre-determined?"
Contents:
What is the breakout level?
How to trade a breakout of the level?
The entrance to a breakout when the price is fixed by level
Entrance at the breakdown with ratescom
Entrance at the breakdown with retesta and a signal price action
Entrance at the breakdown without retesting
How to trade breakouts?
How not to trade the break of the level?
The best way to trade breakouts
How to login to the strongest breakouts?
How to trade a breakout of the level in a strong trend?
What is a breakdown level?
Breakdown is the fixing of the price to a certain level and further movement towards breakdown. But the question of fixing the price should immediately arise in your head, because after all, it is difficult for an inexperienced person to understand what it is. But there is nothing complicated either, fixing is the closing of a candle at a level.
Breakdown can occur at a horizontal or inclined level.

Breakdowns are often the cause of increased volatility in the market. Expecting a breakdown of a key level, we can use this volatility to our advantage and join a new trend at the very beginning.
Why does level breakdown work?
Imagine this picture: we have a strong resistance level with a lot of bears on the chart, which the price can not break through. She makes several attempts, but all are unsuccessful until help comes to the bulls. They overcome bears, and what to do next? Do not retreat, but attack! And they continue to drive the enemy back to the next resistance, where everything is repeated.

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

Entrance to the breakdown after fixing the price level
Entrance is carried out immediately after fixing the price for the level. We are not waiting for a correction or additional signals, but simply open a deal.
The chart below shows the chart of the EUR / USD currency pair, on which the breakdown and further price movement towards the breakdown level are clearly visible. Stop-loss should be set behind the broken candle, in this case, at a distance of 81 points from the closing price, therefore, our level of profit taking should be located at a distance of 162 points from the entry point. As a result, the goal was achieved.
But it was the easiest way to enter, which often gives false signals, and professional traders are still waiting for their moment.

Breakout entry with retest
This is already a slightly complicated tactic of entering the market for a breakdown level, but it will seem simple for you if you are a patient and disciplined trader.
To enter, we will use farewell prices with the level. When the price breaks the level, in 70% of cases it rolls back to it.
The market breaks through the resistance level, but then stops, as the bulls take a break before the next attack. The remaining forces of the bears use this moment to close their orders at 0, which provokes the market to decline. Touching the level, there are practically no sellers, buyers are attacking with renewed vigor.
The following is an example of the USD / JPY currency pair. We have a strong resistance level that has been broken by the price, after which the market begins to decline to the broken level. The price went down and realized that the bulls would not let it back in. Here we began to grow, which could bring 670 points of profit.
Such an entry is effective because it avoids false breakdowns and makes it possible to enter the market at the best prices.

Breakout entry with retest and price action signal
So we got to the most reliable and best signal to enter the market when trading level breakouts. We use the farewell method with the level, only when the price touches the broken line, we want to see the price action pattern.
Below is a graph of the EUR / JPY currency pair, daily timeframe.
The price is trying to break through the support level, but it fails and rolls back. On the second attempt, the market managed to overcome this level, and it returns to say goodbye. But the farewell was not easy, as a “souvenir” the market left the level of a bearish pin bar, which pushed the price down 198 points.
For the correct entry to the breakdown by this method, we need to wait for the level to be overcome, the return, and the formation of the setup price action.

Breakout entry without retest
It is important to note that depending on how strong or weak the market is, retest of the broken level will not always occur.
The price failed to retest the previous support level before falling by 430 points.
However, the lack of a retest does not mean that we should stay out of the market. A retest usually occurs in the next few candles. Thus, if the market begins to move in protorgovke, there is a high probability that there will be no re-testing.
The price begins to move in the bidding market. This is a good sign that the market does not have enough strength to retest the support level. In this case, we can enter the market.

Now about the important. What is the best way to trade breakouts?
Expect a period of long consolidation. It will be best to enter the deal on the third and subsequent touches at the price of the resistance level, since in this case there are no sellers left, and the price is more likely to break the level.
It is important to pay attention to how the price is selected to the level. If the candles are small and the price gradually rises to the level, most likely, it will be broken.
It is also important to observe the behavior of prices near the level. If the price begins to consolidate when approaching the level, this may mean that there are few sellers in the market to decisively move the price from the level.
Breakout trading can be very profitable if you manage to enter the market at the very beginning of a long-term trend.

How not to trade a breakout level?
As we already know, a breakdown of a level occurs when the price goes beyond a certain level.
Breakdown trading ensures that you can enter every strong trend that will appear on the market. If you are trading in a trend, you need to be able to open breakout deals.
However, nothing works perfectly in trading. And the breakdown trade has its pros and cons.
Pros:
You can catch every trend that appears in the market.
Price momentum will move in your direction.
Minuses:
Any breakdown may be false.
It is psychologically difficult to enter a deal when you have to open a position at the highs.
I know from my own experience that after a series of false breakdowns, it can be difficult to continue to trade breakdowns. There is no 100% sure way to determine if a break will be true or false. However, we can use certain techniques that will help us determine the probability of a breakdown with a greater degree of probability.
In the short term, the pressure of buyers or sellers may end, and the price will not have energy left to continue its movement.
Why is this happening?
Imagine that a strong bullish trend has formed on the market, and after a breakdown of the resistance level, the price moves rapidly forward. Smart money has already received a certain amount of profit, and may begin to fix part of its position. Bear traders are also activating, who will seek to catch the counter-trend movement. And the market begins to gradually adjust. At this point, traders who bought at the highs begin to incur losses. When the price starts to adjust even more, they will start to follow in their footsteps. Pressure on the sale will increase, and as a result, the market will fall even more.
Therefore, whenever you see that the market is moving in a strong trend, and the price is at highs, it is usually too late to open a deal in such a situation.