Understanding how price breaks out of a consolidation period is a necessary ingredient for trading success.
The 5 Day Breakout forex strategy offers a simple and efficient way of knowing when such moves are about to happen, so traders can make the most off such valuable trading information.
Learn below how to buy and sell with the 5 Day Breakout strategy:
Chart Setup
MetaTrader4 Indicators: 5_bar_reversal_v0s1u71e_5.ex4 (default setting), 5DayBreakOut.ex4 (default setting)
Preferred Time Frame(s): 15-Minute, 30-Minute, 1-Hour, 4-Hour, 1-Day
Recommended Trading Sessions: Any
Currency Pairs: Any pair
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Buy Trade Example
Fig. 1.0
Strategy
Long Entry Rules
Initiate a buy entry if the following indicator or chart pattern gets displayed:
- If price closes above the 5-day high price level of the 5DayBreakOut custom indicator, depicted by a green horizontal line (refer to Fig. 1.0), it is an indication of price breaking out in favor of the bulls in the market, hence a buy signal is recommended.
- If the yellow upward pointing arrow of the 5_bar_reversal_v0s1u71e_5 custom indicator gets displayed somewhat below price bars as shown on Fig. 1.0, price is said to be pressured higher i.e. a trigger to buy the designated currency pair.
Stop Loss for Buy Entry: Place stop loss below the 5-day low candlestick support.
Exit Strategy/Take Profit for Buy Entry
Exit or take profit if the following rules or conditions holds weight:
- If three consecutive candlesticks are seen to close below the horizontal green 5-day high price level of the 5DayBreakOut custom indicator, it is an indication that the current bullish sentiment is weaning, hence an exit or tale profit is advised.
- If during a buy signal a red downward pointing arrow gets displayed somewhat above the candlesticks, it is signaling to halting bulls power, hence an exit or take profit is recommended.
Sell Entry Rules
Enter a sell order if the following holds sway:
- If price closes below the 5-day low price level of the 5DayBreakOut custom indicator, depicted by a red horizontal line (refer to Fig. 1.1), it is an indication of price breaking out in favor of the bears in the market, hence a sell signal is advised.
- If the red downward pointing arrow of the 5_bar_reversal_v0s1u71e_5 custom indicator gets displayed somewhere above the candlesticks as seen on Fig. 1.1, price is said to be pushed lower i.e. a trigger to sell the specified forex pair.
Stop Loss for Sell Entry: Place stop loss above the 5-day high candlestick resistance.
Exit Strategy/Take Profit for Sell Entry
Exit or take profit if the following takes center stage:
- If three consecutive candlesticks are seen to close above the horizontal red 5-day low price level of the 5DayBreakOut custom indicator, it is an indication that the ongoing bearish sentiment is halting, hence an exit or tale profit will do.
- If during a sell signal a yellow upward pointing arrow gets displayed somewhere below the candlesticks, it is signaling to diminishing bears power, hence an exit or take profit is recommended.
Sell Trade Example
Fig. 1.1
Free Download
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About The Trading Indicators
The 5_bar_reversal_v0s1u71e_5.ex4 custom indicator is trend following indicator that draws arrows on the chart, yellow arrows denote bullish trends while red arrows are for bearish alerts.
The 5DayBreakOut.ex4 custom indicator is a technical tool that draws two horizontal lines, where the upper line is the high and the lower line is the support.