Today we are trading the DAX 40 (DE40) in the 15-minute time frame. We are using the strategy that I have titled “ 1 2 3 Break-out Strategy”
In previous videos and posts, I have explained exactly what to look for regarding the criteria and the setups that need to be in play for us to determine the correct entry, stop loss and take profit targets.
I have also explained that we use the London session primarily to find our entry. Please note that If we do not find an entry in the London session, we then keep our eyes on the chart throughout the day as sometimes the entry can come a little later, and in some cases we even see it happen during the New York market trading session.
This strategy uses a previous range that was set either in the previous day's Asian trading market session or if the price was trapped in a trading range for longer, we use that range as our points of interest. It does not matter how long the price is trapped inside of a range because this strategy is simply a breakout strategy. So we have to make sure our range is determined before we can spot our break out.
Now, what is important to note is that ranges do not need to have support zones and resistance zones perfectly horizontal. We can have all types of Support / Resistance zones. Sometimes these zones work at different angles. As long we can see price respecting these zones and bouncing off of them for a minimum of two taps.
I have called the strategy the 1 2 3 Break out strategy because I believe the best setups occur when we see three taps before the breakout.
Trading is very subjective and it is easy to make our eyes see exactly what we want. We can make any zone on the chart have multiple taps, but the trick is to use the correct levels where, with an objective view, we can see that the price has indeed bounced off of these zones.
The breakout candle should never be larger than 100 pips. I always like to make sure it's less than 90.
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