Intraday Channel Breakout Indicator is a price action Based Trading System that works on Intraday charts. This System uses the opening range as a base for deciding the direction and timing of the trade.
Forex Markets operates 24 hours a day and it can be broken down into three manageable trading periods. Peak activity periods are the late European and North American sessions in which volatility remains high due to increased trading activity during those hours.
Intraday Channel breakout system works during the late European and North American session and keeps traders away from trading non-volatile period.
Intraday Channel Breakout Indicator plot support and resistance or channels based on the opening range of four hours. Midpoints of the range of four hours are called pivot point and High and low of the first four hours form a channel which can be used by traders for making trading decisions. The idea behind the four hours opening range is to avoid whipsaws or non-directional move after the open.
If the price is above the pivot then the bias for the day is for long trades and if the price is below the pivot then the bias for the day is for short trades. If the price gives a breakout from the high of the opening range then the trader should take long trades with a stop loss below the midpoint of the channel.
If price gives a breakdown from the low of the opening range then traders should take short trades with a stop loss below the midpoint of the channel. If price doesn’t give breakout from the channel then traders should avoid trading during the day.
Intraday Channel Breakout Indicator: Buy Signal
- Price should trade above the midpoint of the channel.
- Breakout from the four hour high is a trigger for taking entry
- Stop-loss should be below the midpoint of the channel
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Intraday Channel Breakout Indicator: Sell Signal
- Price should trade below the midpoint of the channel.
- Breakdown from the four hour low is a trigger for taking entry
- Stop-loss should be below the midpoint of the channel.