When swing trading forex, it is often good to use a 7-day 60 minute chart with Average directional index (ADX) signal line, to help identify breakouts. I like to look for new 7-day highs in GBP/USD, EUR/USD and other volatile currency pairs, as they take out new cup breakouts.
Forex cup breakouts are when price goes to a new 7-day high, drops back down into a trading range, then recovers and takes out new highs. The trick is to avoid “false breakouts”, where it looks like it’s going to keep going up, but doesn’t.
One of the forex day trading strategies I’ve adapted for forex swing trades is to use the ADX signal line, and give preference to trading days following days in which the red ADX signal line breaks out above 30. This can potentially help traders avoid false breakouts, while getting in on moves that can continue up in their favor.
Ken Calhoun
