Live Trading Example – Forex Resistance Bounce & Channel Breakout

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Forex Resistance Bounce & Channel Breakout - Live Forex Trading Example

This live Forex trading example combines two important events on the 5-minute chart of the GBP/USD Forex pair. This is the interaction with a Forex resistance and the followed channel breakout. This created a nice short trading opportunity on the chart, which I took advantage of.

Signals of the Short Forex Resistance Trade

  1. The GBP/USD has been moving into a bullish channel that was many times tested at the upper and the lower level.
  2. The bullish channel brought the price action to the resistance at 1.2860, that is older and few times tested.
  3. As a result, the price bounced from the Forex resistance at 1.2860 and broke the lower level of the channel.
  4. The price created a bottom after the channel breakout and returned to the already broken lower level to turn it as a resistance.

Stop Loss and Target of the Channel Breakout Position

I placed my Stop Loss order above the resistance zone at 1.2860. This way I contained all the tops that are located above that resistance area, which makes my trade secured.

I measured the previous two bearish impulses in order to get a picture about my potential target on the chart. However, I also used the Fibonacci levels to see if this target is close so some of the psychological Fibo levels. I saw that the usual bearish impulse goes below the 61.8% Fibonacci level. I decided not to take bigger risk and I placed my Take Profit order at the 61.8% level. Since this level is fully contained by the gray rectangle you will see in the video, it looks like a reasonable minimum target for my trade.

Live Trading Example

Notice that the price action reached exactly the area of the 61.8% Fibonacci level and it started hesitating afterward. This is why I decided that this is a reasonable target for the trade. After all, if you want to aim lower than 61.8% you should be prepared to meet some support at the 61.8% of the previous trend.

Bottom line, I collected 15 pips profit, which equals to 0.12% for about 15 minutes. I wish I had more 15 minute trades that bring 0.12% profit.

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Damyan Diamandiev
Damyan Diamandiev

Damyan is a fresh MSc International Management from the International University of Monaco. During his bachelor and master programs, Damyan has been working in the area of financial markets as a Market Analyst and Forex Writer. He is the author of thousands of educational and analytical articles for traders. When being in bachelor school, he represented his university in the National Forex Trading Competition for students in Bulgaria and got the first place among 500 other traders. He was awarded a cup and a certificate at an official ceremony in his university.

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