In life but as much so as with trading, we tend to make things more difficult than necessary. That's why with trading it's best to keep things simple and focus on effective strategies that have a high probability of success.
In this regard, a rather unknown but simple and effective trading strategy with a high probability of success is the Box Breakout.
What is a box?
A box is considered when the price has consolidated and moves sideways in a clear range of support and resistance:
On the above chart, you can clearly see the range of support and resistance NEO/BTC has consolidated in, forming a box-like pattern. Notes the divergence in RSI and MACD, which makes the pattern in this case even stronger.
How to trade the box breakout?
There are two ways to trade the box breakout:
1. On the initial breakout.
2. After the pullback of the breakout. This in case you've missed the initial breakout and often has a higher probability of success as well.
1) On the initial breakout
Trade Setup:
Determine the range with a clear support and resistance levels to set up the box pattern.
Entry Point:
Enter when the box or resistance level has been broken.
Stop Loss:
Place your stop loss (just) under the box or support level.
Profit Target:
Use previous (key) resistance levels to determine your profit target(s) or to take some profits along the way.
2) After the pullback of the breakout
Entry Point:
Enter after the pullback and the price is above the 12 ema again.
Stop Loss:
Initially, place your stop loss (just) under the 50 ema. When you're in the trade, you can use the 12 ema to trail your stop.
Profit Target:
Use previous (key) resistance levels to determine your profit target(s) or to take some profits along the way.
Hope you this post has given a simple strategy with a clear setup and high probability of success or at least some inspiration to trade from.
If you found this post informative and helpful, please give a like and or share. Leave a comment if you have any questions.
And as always, good luck with your trading!
In this regard, a rather unknown but simple and effective trading strategy with a high probability of success is the Box Breakout.
What is a box?
A box is considered when the price has consolidated and moves sideways in a clear range of support and resistance:
On the above chart, you can clearly see the range of support and resistance NEO/BTC has consolidated in, forming a box-like pattern. Notes the divergence in RSI and MACD, which makes the pattern in this case even stronger.
How to trade the box breakout?
There are two ways to trade the box breakout:
1. On the initial breakout.
2. After the pullback of the breakout. This in case you've missed the initial breakout and often has a higher probability of success as well.
1) On the initial breakout
Trade Setup:
Determine the range with a clear support and resistance levels to set up the box pattern.
Entry Point:
Enter when the box or resistance level has been broken.
Stop Loss:
Place your stop loss (just) under the box or support level.
Profit Target:
Use previous (key) resistance levels to determine your profit target(s) or to take some profits along the way.
2) After the pullback of the breakout
Entry Point:
Enter after the pullback and the price is above the 12 ema again.
Stop Loss:
Initially, place your stop loss (just) under the 50 ema. When you're in the trade, you can use the 12 ema to trail your stop.
Profit Target:
Use previous (key) resistance levels to determine your profit target(s) or to take some profits along the way.
Hope you this post has given a simple strategy with a clear setup and high probability of success or at least some inspiration to trade from.
If you found this post informative and helpful, please give a like and or share. Leave a comment if you have any questions.
And as always, good luck with your trading!