Breakdown level at forex.Very often, beginners hear about the strategy on breakouts, with the majority of professional traders recognize it fairly high efficiency. What is the breakdown level and FX as used in trading.
Breakdown level - overcoming certain price limit price which is the boundary for some time for further growth or falling course. It is near the border of the price before doing a U-turn, but there was a breakdown of the rate of the currency pair and rushed on.
Before you go to the very heart of the matter should be clarified, what are the levels in the forex.
Usually distinguish these types of levels of forex - support and resistance lines, historical and just important point on the chart reached the price of which makes a U-turn in the opposite direction.
Support and resistance lines are conducted on the basis of significant highs and lows prices, limiting itself, the price band in which the exchange rate moves. From then reaches the upper limit, then again descends.
Important point - they are called basic, since they act as a psychological barrier that will not allow bidding on. For example, the value of the quotation of 1.0000 or 1.5000 is always difficult to overcome, but if the rate managed to break the limit, it is likely to move further in the direction of the breakdown.
Historical levels - they are based on a technical analysis of previous time intervals. For example, if during the week the euro / dollar will not rise above the 1.2500 figure and it is our historical level.
Breakdown occurs when the price is not simply reaches a certain figure, and continues to move forward at the same time it can be both true and false.
• True - the price continues to move in the direction of the breakdown of a fairly long period of time, for each time frame, this value will be purely individual.
• False - the course, passing a couple of points, making a U-turn and returns to the usual framework. It is this option often is the cause of most of the loss, so before opening a position should be, first to obtain confirmation of the breakdown.
As mentioned earlier in this article, this aspect is often used in a variety of policy options in the forex. They all laid one principle - if there was a breakdown of the level, the price will very likely go on, so decided to open the transaction is in the direction of the breakdown.
Description of the most trading strategies can be found in the article "The breakdown of the level of strategy."
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