Forex Breakout Types

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Forex Breakout Types

Breakout type, before you know how to trade forex using a breakout strategy, you must first know the various types of breakouts. You don’t need to worry because there are only two types of breakouts in general, namely Continuation Breakout and Reversal Breakout.
By knowing the type of breakout, you can understand what is happening in the forex market so that you can make the right decision to trade forex.

Please note that the breakout is very important because it shows changes in supply and demand for the currency pair in the market. And a change in this when a sentiment will create a price movement that will give you an opportunity to make a profit.

Continuation Breakout

Sometimes in the market you will see a period consisting of price movements that are always within a certain price range. Actually this shows the rest time between the seller and the buyer trader. They are taking a break to take a fresh breath and this kind of price movement is commonly referred to as consolidation .

If traders then decide that the price does have to move like the previous movement, this will result in a continuation breakout .

Reversal Breakout

Reversal breakouts have the same initial movement as the continuation breakout and after some time or period the movement is stopped / delayed or the term consolidates.

It’s just that it has a difference that after the consolidation is formed the traders agree that the price should move in the opposite direction from the previous movement to form a trend reversal or it could also be called a reversal breakout .

False Breakout

So the false breakout can be said to be a price failure to form a breakout signal so that if we are not careful we will be trapped in a loss.

False breakout usually occurs when the price has broken through the support, resistance, pivot point, triangle lines and so on but is unable to continue the movement so that you will find a spike or price hike which then returns to the trading range.

An appropriate way to trade with a breakout strategy is to wait for the price to break the breakout level and return to the breakout level limit and then wait to see if the price will bounce back to create a higher or lower price (depending on the direction of the current price movement You’re trading).

Another way to trade with this fake signal is to not rush to open a trading position but wait for confirmation that the breakout really happened. But there is a possibility that you will miss the opportunity if it turns out the price is experiencing an actual breakout.

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