Feedback from the last article (Breakout Pullbacks – Sometimes They Come Fast) was very positive. Thanks! It seems that people want more examples of setups.
Ok. So, here’s another, this time with a more ‘normal’ breakout pullback.
I don’t often get an opportunity to trade the UK open but did so this last Tuesday, and it provided a great setup from the Asian session range breakout.
Looking at the chart…
A = possible resistance formed by the high of the Asian session price action.
B = possible support formed by the low of the Asian session price action.
C = a retest of the support area.
D = breakout.
E = pullback to the point of the breakout. Note the upper tail showing rejection of prices above this level.
F = the subsequent candle, once again unable to push to new highs, and in fact closing back down on its lows. Bullish demand appears unable to sustain this pullback and force price back into the range.
G = point of entry either on the break of candles E & F, or if you prefer on the break of the swing low.
The entry on the break of candles E & F provides a risk of 12 pips, with a potential reward of around 30 pips down to the next support level, H.
Breakout pullbacks – one of my favorite setups.