We start with 1 hour time frame, preferred pair – GBP/USD and no indicators.
The price range we are going to focus on is from 1:00 am EST to 2:00 am EST.
We look for the highest high and the lowest low of the price in that range and simply draw parallel horizontal lines through those extremes that will create a tunnel.
Now we are ready to move to a smaller time frame – 5 minute chart – and watch for the whole 5 min candle to close outside the tunnel which will provide a signal for us to enter with the open of the next candle.
We use a 20 pip stop OR the other side of the tunnel – whichever is less.
Simple breakout SystemSimple breakout System
We are aiming at at least 20 pips profit. After that we have several options: lock the profit in, start “chasing” the price with a trailing stop by placing the stop just below the lowest low of the previous 5 min candle, or simply exit within the three consecutive hourly candles from the moment the trading order was filled.
Avoid trading before and after holidays.
It is believed to be difficult to trade Mondays. Also if there was no clear trend established during the week, it’s better to skip Friday trading as well.
These are not rules though, only suggestions.