US Commodities Breakout Trading Strategy 2019 An Overview
A breakout trading strategy is one of the powerful trading strategy in all types of trading sector’s especially in commodity trading market, this kind of trading strategy does perform very well in a trending market, because the breakout market pattern does like to behave well during a volatile market in both types of conditions like uptrend and downtrend. For example gold, silver, platinum, copper, these all suit to breakout trading strategy based patterns. Furthermore a breakout trading strategy can also be used in stock market, forex market, etc.
Whenever a market price of any financial market for example commodity market does breaks through a support area or any resistance area then this kind of situation is called as an breakout market pattern. Keep in mind that this strategy would not be clear to understand until you don’t has a proper idea of support and resistance trading analysis. Make sure that you have a good experience and knowledge of technical analysis terms so that it can be more clear for you to understand the use of breakout trading strategy.
The good thing about the breakout trading strategy is that it does follow the foot prints of the big market players, means to say if a market trend is going up that time a breakout trading strategy would give you a buy sign, and during a downtrend a breakout would give you a sell sign. On the other hand in several market conditions especially in reversal market sign you will not get a perfect trade to make money.
Though no trading strategy is 100% correct, all commodities behave differently time to time, hence this is important to do trade with proper caution and it is very necessary to do trade in long term time frames with a breakout trading strategy for better trading output. Lets have a look on a proven breakout trading strategy based pattern which can give you a wonderful result in us commodity market.
How to trade US Commodities with breakout trading strategy?
As we know that there are three types of market patterns in US commodities uptrend, downtrend and sideways. This trading strategy is very useful in uptrend and downtrend and in sideways market this would not be a good approach for a buy and sell so we would recommend you to use only this strategy in a suitable market conditions & patterns.
Uptrend: Breakout trading strategy does provide so many trading opportunities during an uptrend market until we don’t has a lower high and lower low sequence till then this strategy can provide regular profit in a bull run again and again. But after 2,3 waves its common that a lower high and lower low sequence would take place in the behavior of market price.
As shown above in the image during the use of this strategy we have to keep in mind that after the breakout it would be necessary to wait for a pull back so that we can understand wisely that we should buy or not, because so many time we also see that a market price does not get good support downside and it goes back down once again which may arise the picture of loss in our trading. But if we see that a good support is pushing the market price back up again then it will be a very good sign of buy for us.
Though we have to pay attention on reversal areas also because this is possible that in near future a picture of lower high and lower low may appear in market, which can be a sign of bearish down trend also. That’s why most of good trader’s likes to buy in dip and they sell’s on high later. Furthermore for more powerful confirmation we may use the fibonacci tool which is also one of the fantastic tool to understand the strength of market trend during an uptrend breakout trading strategy.
Furthermore most of trader’s do trade wrongly when they starts to use a breakout trading strategy, buying at once after a breakout would no be the right approach to follow in a commodity market, as I said we should wait for a pullback only after that we have to decide that its a good buy or not. There is a simple rule that a buying should be come after a sell, a buy should not be come with a buy, because this is a process of buyers and sellers.
Downtrend: In downtrend market you have to use this trading strategy within a opposite way, as compare to uptrend trading strategy. During an uptrend we was waiting for a reversal after a resistance breakout and in the same way during a sell we have to wait for a support breakout and after that we have to look for a sell sign after a temporary reversal.
There is no market in any financial securities which does go up and down in a straight line, pull back is necessary that’s why a right understanding of breakout market chart patterns would be more essential during the use of this breakout trading strategy.
Keep in mind that some time market may make a double top and doube bottom pattern also during a down trend and uptrend stage and this would be a trader’s duty to understand and practice these chart patterns to make an effective buy or sell sign at the end. Market price chart patterns are not fixed at all, they can be change time to time. But overall this is a very nice trading strategy which would give you a great helping hand to achieve wonderful result in your trading.
Though this type of trading strategy would not work properly in sideways market and most of time it will go against you which is one of the top weakest point of this kind of trading strategy, this chart pattern does work well when a market trend is running in a uptrend, downtrend only. We hope you liked the content thanks for reading.