just closed the sell for +39 pips, would have let it continue but it’s Friday.
On this note, the last month seemed more profitable when only setting orders when the hourly ADX was below 35.
This isn’t conclusive as there’s not enough data to test, I can go back to March but do you think it matches up with what you have been viewing as dodgy trades when the overnight price action has been continuing in channels, ie during the low volume period, price isn’t actually settling much and therefore there’s nothing to break out from?
I’d like to look into this some more but not really sure what to look at as the ADX is a lagging indicator.
Again I don’t suggest using the indicator but is useful for backtesting to see if overnight trending price action might be an issue.
Notes on the GBP/USD Breakout Strategy for Sunday/Monday:
Here are two views of the GBP/USD 5-minute chart. The first chart shows the GU from about 23:30 GMT last Thursday til now.
The second chart zooms in to show the current “overnight” period. Note that the current period is shortened (from the normal
10 hours) because of the Sunday opening.
On the first chart, the left-hand green vertical line marks the end of the Thursday/Friday period. The two right-hand green vertical lines mark the current “overnight” period.
We are looking at a channel within a channel. The wide channel is bounded by Lines 183 and 184. The much narrower and much steeper channel is bounded by Lines 195 and 196. The price has risen relentlessly for almost 100 pips, since the re-opening of the market around 19:00 GMT Sunday. This is the most extreme inclined channel we have seen, since we’ve been trading this strategy as a group.
The LOW was made at the beginning of the period, and the HIGH appears to have been made very close to the end of the period.
So, do we have a potential trade this morning? Do we have 2 potential trades?
I don’t want to do your thinking for you. Before I tell you what I think, I’d like to hear from some of you. Would you trade the Breakout Strategy this morning? If so, would you trade it one way, or both ways? Where would you place your Entry Order(s)?
Guys, I’m asking for some participation here.
Clint
Hi Clint/Everyone
Just to jump in on morning’s like today where the price is the high on the last candle, what i tend to do is wait a little while to see how far the price retraces using the fib from the high to low if it reaches the 23.6 bar then i will place my pending order for the high, what we are looking for is a bowl shaped pattern into the Break out.
so far it sill in the range but i have 2 pending orders set now waiting to see what happens
im sure you all have your own ideas of when to set your pending orders, my key is if i dont know i dont trade. Patience is sometimes our freind to
also i want to thank Clint for his excellents posts on these thread as i think they are a great benifit to us all
Good morning, Trev
I agree with you on the Buy.
You said that you have 2 orders set. Have you also set a Sell order?
i do but i doubt the sell order will be triggered to be honest (then again stranger things have happend before)
im confident we will break the highs but i think we will have to pay close attention to the momentum on the run up, 2 many day latley it passes the highs with a qick retracment resulting in lots of heart attacks
i have traded out manually for a 1 pip profit whoop whoop
i believe the trend will be up maybe but i have heard to many stories this morning about cable been over sold
they trend for the week is apprantly all pointing down for cable
You should have hung in there, my friend.
I split my order into two halves, and made 30 pips on the first half, and 47 pips on the second half.
But, it was touch-and-go for more than an hour.
I’m out, and glad to be out safely.
Have a great day!
Clint
well done clint
yes youre right i am kicking myself now lol
it always looks obviouse after the event hehe, i bottled it because i really didnt enjoy the last 2 weeks oh well 1 pip 20 pips pr 100 pips no matter its better than a loss
congrates once again
You bet — I’ll take a small profit instead of a loss any day.
Cheers
Agree, it is easy in hindsight. I jumped ship way to early with 10 pips, but then better the none.
Hi Clint, you asked for participation. I went to bed early and didnt do any trading last night. I would have done a buy order though just because of the trend up. I was reading an old daytrading book this weekend and it was talking about avoiding a false breakout. Strategy was similar to this but it was just looking at the last couple overnight hours 1 to 2 edt.
Morning, Oskar
We didn’t hear from you last night. I thought you had abandoned us.
Glad to hear you made some pips.
Last night was rough. It was really hard to stay in a position during that hour between 2am and 3am (New York time), when the momentum died, and it looked like the GU was going to head south.
I don’t think many of our regulars traded the Breakout Strategy last night.
Maybe we’ll get a decent set-up tonight, and everybody can make some pips.
Have a great day.
Clint
Hi, Talon
I wondered where you were last night. Sleeping, huh? What is this “sleep” you speak of?
You should be glad you slept through last night’s trade — it was a tough one.
For a change, it sure would be great to have a nice, narrow, well-defined, horizontal channel — followed by a clean, decisive breakout, with no hesitation and no fooling around. Is that too much to ask for?
We’ll have another go at it tonight. Hope you can stay up for the fun.
See you then.
Clint
Hi:
I have 3 weeks making pips with this strategy with only 2 lost. Last night two of my friends and I make some pips. We placed pending orders for 10 to 15 pips and forget about it. I live in Florida and it is hard for me to stay awake for some more pips plus the emotional factor.
This is a great thread!
thanks
terachon
Do you think any overnight upward/downward channels suggest the following trade is going to fail? It seems so far that the trades after these channels might still move in that direction but price is a bit more volatile therefore hitting stops. ie when in a channel, it is n o longer classed as low volume overnight…
Hi, SanMiguel
I mentioned in a previous post that price can break out of any type of channel, horizontal or inclined.
In order to have a breakout, you have to start from some sort of price pattern (channel, or otherwise), because you have to have some frame of reference from which to define “breakout”. In other words, a period of price action has to be bounded by some pattern of lines, in order for the term “breakout” to mean anything.
The trouble with an [B]inclined channe[/B]l is this: price can break out of the channel by heading SIDEWAYS — and there’s no future in trying to trade a sideways price movement.
On the other hand, with a [B]horizontal channel[/B], sideways price movement basically continues the channel; whereas a breakout from this channel implies a new (trade-able) price movement, either to the upside or to the downside.
Last night, the GU was in a persistent uptrend during the “overnight” period. Near the end of the period, price broke the up-channel by moving sideways, and then wandered downward. Then, suddenly it took off upward, stalled for an hour, and took off upward again.
It could be argued that such price action was not a break-out, at all. In fact, if you look at the chart now, 18 hours later, you could easily draw new channel boundaries, and say that the GU was in a single up-channel from 19:00 GMT Sunday until 13:00 GMT Monday, and no breakout occurred last night.
Which is not to say that we didn’t make some pips last night. But, we actually made those pips by trading a continuation of an up-trend, not by trading a true breakout.
As for volatility, last night between 06:00 and 07:00 GMT, while the upward momentum was stalled, price volatility threatened our stops. My stops (I had 2 positions on) were at 1.6393 (30 pips below my entry price), and the price came within 5 pips of taking me out. It’s at times like that when you start to doubt your trade.
I’m not sure whether you are using the terms “volatility” and “volume” to mean the same thing (technically, they aren’t the same). But, I don’t think either volatility or volume define a break-out situation. What defines a breakout situation is a “box” that the price is stuck in, which we expect it to bust out of. That “box” can be a triangle, a pennant, a flag, a horizontal channel, or an inclined channel.
In the GBP/USD Breakout Strategy, we are looking for a narrow, clearly defined, channel, triangle, or pennant — preferably horizontal, or nearly horizontal — representing a “quiet” period in the market which we expect the price to “wake up” (break out) from. Generally, the longer and narrower the “quiet” period, the stronger the breakout will be, when it comes.
Sorry this post got so long. I hope it answers your questions.
Clint
I just ordered my trades for tonight, I know it is early but maybe I get up, maybe not.
Long 1.6564 TS 10 SL 40
Short 1.6486 TS10 SL 40
I wonder myself how this trade will come out. Will see you in the morning
Clint:
“I’m an Idiot I know”
Happy Trading
Talk to you later
I tried a quick post earlier but couldnt get babypips to come up. well it looks like more of the same tonight. Looks like a downtrend but approaching support of the longer uptrend. So what’s it going to do? I’m confused.
by the way, I’ll try to stay up longer tonight! 
Notes on the GBP/USD Breakout Strategy for Monday/Tuesday:
Here are two 5-minute charts, one wider view, and one zoomed-in view. On each chart, the green vertical lines mark the overnight period(s). The wider view shows last night’s period, as well as tonight’s. The zoomed-in view shows tonight’s period, only.
The green horizontal lines are Fibonacci retracement levels for the price rise which began on the 12:20 GMT candle on Friday, and topped out on the 19:10 GMT candle on Monday (the HIGH in the current period). The gray horizontal lines are support levels.
On the wider view, notice the wide inclined channel. Ignore the narrow and steeper inclined channel (that was last night).
On the zoomed-in view, notice the Period HIGH, marked by Line 31 and the green Fibonacci(0%) line. On my chart, that HIGH is 1.6557 (rounding off the tenths of a pip). Also, notice the Period LOW, marked by Line 32; and notice its proximity to the Fibonacci(23.6%) line. On my chart the LOW is 1.6494. And notice the lower boundary line (Line 33) of the wide, inclined channel, and especially notice how it intersects the end of the “overnight” period AND the Period LOW at virtually the same point. Finally, notice the narrow price range in the current period:
63 pips.
Here’s what I conclude from the above. During the current “overnight” period, the GU has made a large, round top, after a price rise of almost 300 pips since noon GMT Friday. The Period HIGH is the highest high since June 30. For the past 12 hours, the GU has been in a narrow, horizontal channel — just what we’ve been asking for.
If the price breaks to the upside (which I do not expect), resistance levels will basically be every 50 pips beginning at 1.6600.
If the GU breaks to the downside (as I expect), a break of the Period LOW implies a breakout from the wide, inclined channel that the GU has been in since noon GMT Friday. This double breakout will probably be seen as very bearish by many traders, and the resulting down-move could be large. Support levels may or may not provide much of an obstacle to a major down-move.
Regarding economic news, Fed Chairman Bernanke testifies at 10am (New York time), 14:00 GMT on Tuesday, but I don’t expect the market to focus on that for the next 6 hours or so.
Here are Resistance and Support levels:
R: 1.6700
R: 1.6650
R: 1.6600
S: 1.6487 — Fibonacci(23.6%) retracement — weak
S: 1.6453 — Monday
S: 1.6445 — Fibonacci(38.2%) retracement
S: 1.6413 — Thursday July 16 — strong
S: 1.6410 — Fibonacci(50.0%) retracement — strong
I will place entry orders, as follows:
BUY 1.6566, SL 1.6536, TP 1.6596
SELL 1.6488, SL 1.6518, TP 1.6448 (for one-half of my position)
SELL 1.6488, SL 1.6518, TP 1.6418 (for one-half of my position)
If you’re trading the Breakout Strategy this morning, let me know what you think.
Clint
