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Do you need to catch the initial move to trade a breakout, or are there other ways of trading it? In this article we look at an alternative method using Fibonacci retracements.
When markets move, particularly in Forex, they move fast. We all have witnessed breakouts and have had the occasion to lament a trade that got away. The beginning trader sees breakouts as a way of riding a strong wave of volatility and providing a quick profit. The problem with the strategy of playing a breakout is that breakouts are technically unstable. They present difficult questions to answer, such as: How long will it last? Especially when there is an absence of news, the question of what caused it is difficult to determine. The better way to trade a breakout is letting the breakout occur and waiting for a subsequent pattern to emerge. Often a Fibonacci retracement pattern emerges, providing trading set-ups. Let?s look at some patterns.
Such a breakout occurred in reaction to the Treasury International...

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