By James McKee
When approaching an intraday trade it is very important that a trader always bear in mind the chance of false breakouts and prepare accordingly. When preparing to enter a trade it is important to look for ascending and descending triangles, this is because the pattern established creates a directional bias for the trade. With an ascending triangle bullish gains are being bought at ever increasing levels while the bearish levels are attempting to establish steady support. When trading within these patterns it is best for the trader to keep the pair’s previous pattern in mind before the triangle appeared.
The direction a triangle takes on is an effort to break the horizontal support or resistance. If the pair was going in this direction prior to the formation of the triangle it makes the trade very potentially profitable. The time of day one makes a trade in is also of the utmost importance, because trading when there is high volume as opposed to low volume is always a great idea. Due to this trading during the London session is a great way to achieve the goal of making high volume trades.
Making a trade during a time when there is high volume is key in avoiding false breakouts as is often the case near the close of the Japanese session. A trader’s schedule can be either be their best friend or their worse enemy depending on when they are active versus inactive within the market. The simple fact that many traders are not awake at 3AM eastern time means that they are missing out on the opening of the London trading session, the period which happens to produce the highest volume. False breakouts can of course occur during peak periods as well and as we all know there are no guarantees in the Forex currency exchange, but there are certainly advantages.
About the Author
Author is a Forex trader and financial analyst residing in Denver, Colorado. To stay up to date on all the latest developments in the financial world and beyond be sure to check out the forex exchange rates regularly.
