In today’s lesson, we are going to demonstrate an example of trend riding along with the H4 breakout trading strategy. We often see that the market is in a strong direction, but it does not offer many entries. It is frustrating, but we must take it easy. We must not be impatient but keep our eyes on the chart. We never know what is around the corner.
This is an H4 chart. The chart shows that the price has been heading towards the South with strong bearish momentum. However, it has not offered any A+ entry yet. It produces some strong bearish engulfing candle breaching through consolidation support. However, consolidations have been shallow. Thus, the sellers on this chart have not been able to make the most of it. Look at the last candle. It comes out as a strong bearish candle as well. It suggests that the bearish trend is strong enough, and it may drive the price towards the South further. Let us proceed to the next chart.
The chart produces a bullish inside bar. This time it looks better since the inside bar candle is a long one. This means if the chart produces a bearish engulfing candle again, it would be after a deep consolidation. The deeper consolidation, the better it is as far as reward is concerned.
The chart produces two more bullish candles. It looks like it has been searching for its support. Deeper consolidation/correction is good, but if it goes too far by making a bullish breakout, equation changes. Let us proceed to the next chart.
Here it comes. An A+ bearish engulfing signal candle this is. The sellers may trigger a short entry right after the candle closes by setting stop-loss above the candle’s high. Take profit may be set with 1:1 risk-reward.
The chart produces another bullish corrective candle after such a nice-looking bearish reversal candle. However, it heads towards the South and hits the target. We learn two lessons here.
- A chart may not offer as many entries as we anticipate, even it is on a strong trend.
- We never know what is around the corner in the Forex market.
At one point, it seems that the chart may not offer any short entry for the H4 sellers. The price keeps heading towards the North. Deep consolidation is about to get into too deep. At last, the signal candle comes and offers an excellent short entry. While trading, we are always to be on our toes since we do not know what is around the corner in the Forex market.