PATIENCE IS A VIRTUE

Successful traders will let opportunities come to them instead of chasing them. The EUR/USD has had a relatively low volatile experience in the last couple of weeks, rarely varying a little over 100 pips. It has roughly been trading in a tight range since May 18 between 1.3400 and 1.3550 if we take into account some low and high spikes.

Of notable interest was the significant support being formed around the 1.3400 level, tested at least a couple of times meaning that a breakout could have been significant. It would have been very difficult to capture any big movements in the meantime unless we were looking at a very short-term picture. As we can see on the above hourly chart, in retrospect, a breakout of this range would look tempting, especially on the downside.

Such was the case as the biggest profit-taking opportunity came after 3 weeks of range trading. Ideally we would place a limit entry sell order around 1.3400, confirming the breakout of the horizontal support. A stop order of about 30 pips (1.3430) would save us from a significant rebound. We would ride the breakout until it ended around 1.3340, closing our position and taking a 60 pip profit. Note that this significant breakout of the range gave us a very attractive reward to risk ratio, risking our 30 pip stop but getting 60 pips in return!