Trend Following Breakout System
Trend Following Breakout System
Even when incorporating trend following on higher time frames
A breakout is equally preferable
Because it operates as a flag on shorter time frames
On the short-term time frame, the trend market is reversing
And the trend is being formed to some extent
At this time, short-term traders are switching positions
When the long-term time frame restarts the trend
The short-term time frame ends up as a flag
Naturally, the short-term traders at this time will be holding positions without being able to switch them
The essence of the market is influenced by the number of traders’ positions
Gradually, the balance of traders’ positions changes and the weighting becomes biased
Considering that, this trend-following breakout
fits well with riding the imbalance of buy and sell pressure
However, one thing can be said
Always focus on “only riding the diagonal trend-following”
For example, in markets like those with horizontal support/resistance shown in the image, do not trade
Why is it important that it is diagonal?
Because it depends on where traders are buying and selling
In a horizontal support/resistance case, the level of support/resistance is easy to identify, right?
If it’s easy to identify, it’s easy to set stops
Therefore, a breakout is less likely to succeed
In a situation where the market hasn’t formed a trend yet, follow-breakouts are prone to fail
In the case of angled support/resistance
The areas used as support/resistance will also be support/resistance from trendlines
Would it be easy to place a stop here?
From a trader’s perspective, “it’s hard to place a stop,” right?
What about when the market shifts and trends reverse?
When the stop is delayed, some traders end up needing to stop out quickly
After estimating a certain number of turn-around traders
a flag forms indicating the resumption of the trend
What gets entered at that time is
Trend Following Breakout
Therefore, when it breaks at an angled support/resistance trend, the movement moves in the trend direction as a reaction
Now, regarding this analytical indicator
34MA is used as the basic reference
We display along with the 34MA the 34 envelope around 0.1%, showing the 34 highs and lows
This does not mean envelopes are inherently effective
Why display the 34 highs and lows?
Because it provides an easy and intuitive understanding of angled support/resistance analysis
By just looking at the MA highs and lows, you can understand whether the trend is skewed diagonally
Essentially, the movement between the highs and lows indicates the trend estimation method
If buying pressure is strong, it moves above the highs
If selling pressure is strong, it moves below the lows
CCI is displayed. CCI is 20. The level numbers are set at 100 and -100
CCI is used as a supplementary tool when actually entering a breakout
As a trend follower
First, to estimate the trend market
Use the 34MA highs/lows to gauge buying pressure and selling pressure trends
If you understand it as a trend market
After touching the 34MA, breakout of the highs/lows in the trend direction, and breakout of the CCI trend-direction ±100
This is where you enter
If you want to trade confidently, break the trend-direction highs/lows and
wait for about five more timeframes before trading
If during that time the trend market does not stabilize, refrain from trading to avoid losses
As for stop-loss placement
Place the stop at the 34MA or the highs/lows opposite to the trend
The take-profit is considered equal to or two to three times the stop
When the trend market is stable, it is also recommended not to set a take-profit position and to let profits run
The trend market is aware of angled support/resistance, so simply placing a take-profit at the top of the trendline is also appropriate
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