فوركس ساتو

OPPORTUNITY 7 – CONSOLIDATION CHANNEL
BREAKOUTS
This is really quite simple. A “Consolidation” is when your prices
move sideways, in a narrow channel. This is a common thing many
traders watch for as it happens often, and usually presents profitable
trading opportunities. Big consolidations usually happen in
anticipation of significant Fundamental Announcements, but you
will often encounter smaller ones that have no obvious reason.
To frame your consolidation channel simply draw two trend lines.
One along the top, the other along the bottom. The lines are usually
perfectly horizontal (though they sometimes could have a slight
slant). Look at the following diagram.forex sato

 forex sato
The general rule of thumb is that the width of a sideways channel
will more or less equal the height of the price movement once the
price eventually breaks out of the channel. The standard way most
traders trade such channels is to place an entry order above and
below the channels, with a stop at the opposite side of the channel.
The biggest problem most traders encounter doing the standard
FOREX Surfing Draft .forex sato
approach is that they get whipped by false breakouts. Some traders
will only enter a trade on a channel breakout when they see a “full
candle outside of the channel” as this helps to avoid false breakouts.
Bottom line is that you’ll find the surfing approach handles these
situations nicely.
When you see that the price has broken through the channel then
just wait a bit. The price should pull back a bit. Once it has pulled
back then place your “Surfing” entry order. If it was a false
breakout then most often you wouldn’t get entered in on the trade,
and you won’t lose anything. But if it was a real breakout then
you’ll get picked up on the trade once it continues advancing in
price.
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