Forex Trading Education - How To Trade Price Consolidations
By Harold Hsu
Trading on price consolidation breakouts is a popular choice among traders. In this article, I will present to you one of the most effective and simplest ways to trade consolidations.
What Is A Price Consolidation?
Price consolidation occurs when there is no obvious uptrend or downtrend in short-term time frames. Ranging markets are not considered to be consolidating because prices are still fluctuating up and down. In a true consolidation, market prices don’t fluctuate and typically stay within a 10 to 15 pip range.
What Time Frames Should I Trade?
Consolidating prices don’t usually last very long. That’s why you’ll usually trade using intraday time frames (i.e. hourly charts or minute charts). Occasionally, daily charts may show flat prices as well… but these are more the exception rather than the norm.
How Do I Trade It?
Most people enter into a trade when prices break out of the highest price (or lowest price) of the consolidation. If prices break upwards, they buy. If prices break downwards, they sell. The decision to trade on breakouts is based on the assumption that the momentum
Euro/dollar consolidation process narrows the range
EUR/USD (1.3643)
European & US sessions forecast levels: 1.3455/1.3840
Trend Sessions: European: Neutral
US: Neutral
Market Focus: 8:30 AM M Continuing Claims,
EUR/USD consolidating process at 1.35/1.38 continue
EUR/USD (1.3600)
European & US sessions forecast levels: 1.3455/1.3840
Trend Sessions: European: Neutral
US: Neutral
Market Focus: 10:00 AM Wholesale Inventories,
Review of Last Week - Energy
Crude Oil – US crude oil futures ended at their highest level in nearly eight weeks on Friday, rallying with Wall Street, as government data showed that US employers cut
The Midas touch – Gold strengthens
• Gold shares an inverse relationship with the US Dollar (USD) and is generally seen as a safe
The dollar starts with the recovery by Friday-Monday losses
EUR/USD (1.3618)
European & US sessions forecast levels: 1.3455/1.3840
Trend Sessions: European: Neutral
US: Neutral/Downward
Market Focus:
Daily Strategy: The
The dollar may continue lose before strength again
EUR/USD (1.3674)
European & US sessions forecast levels: 1.3455/1.3840
Trend Sessions: European: Neutral/Upward
US: Neutral/Downward
Market Focus:
Daily
U.S. jobs report on focus today after the Greece debt hopes over
EUR/USD (1.3580)
European & US sessions forecast levels: 1.3455/1.3840
Trend Sessions: European: Downward
US: Neutral/Downward
Market Focus: 8:30 AM Unemployment
The Greece problem will escalate by rising strikes
The strike in Greece may escalate, as the rescue government plan will fail. The government takes decision to raise the taxes in Greece that may cause wave of strikes in
The dollar may recovery the last losses from Wednesday
EUR/USD (1.3674)
European & US sessions forecast levels: 1.3455/1.3840
Trend Sessions: European: Downward
US: Downward
Market Focus: 8:30 AM Initial Claims,
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Hopes for Greece and bad expectations for U.S. jobs move the dollar low
EUR/USD (1.3635)
European & US sessions forecast levels: 1.3455/1.3840
Trend Sessions: European: Neutral/Downward
US: Neutral
Market Focus: 8:15 AM ADP Employment
Weekly Outlook - HY Markets
This week on the Markets:
US gross domestic product for the fourth quarter of 2009 was revised upwards to 5.9% from the advance estimate of 5.7%. This marks the
EUR/USD consolidate in expecting of Friday jobs report
EUR/USD (1.3538)
European & US sessions forecast levels: 1.3455/1.3840
Trend Sessions: European: Neutral/Upward
US: Neutral/Downward
Market Focus: 2:00 PM Auto
Last Week's Market Review - HY Markets - Forex and Commodities
– The Euro recovered last week from a nine-month low although investors remained worried about Greece's ability to get its budget deficit under control. Concerns about
Last Week's Market Review - HY Markets
Crude Oil – Oil prices ended slightly lower last week rattled by economic data that raised more anxiety about the strength of the US recovery from recession. Oil market
of the break will be strong enough to push price further in the same direction.
How Effective Is It To Trade Breakouts?
In my experience, breakout trading can yield rather consistent profits. This is because they usually follow through. The hard part is deciding when to exit your trade once it’s in-the-money, because breakouts sometimes reverse directions quite quickly.
What Should Be My Profit Target?
Usually, a profit target of 30 pips is good enough. Sometimes, you may want to try for 50 pips. I don’t usually hold breakout trade positions after I’m in-the-money for 50 pips because then the price action will usually turn erratic.
By: Harold Hsu
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