You already know that the market opens during the Asian market with a consolidation before expansion and trends. The Intraday Channel Breakout indicator helps trade this range. It is based on the opening four-hour range.
The highest and lowest points form the channel, with the midpoint being the pivot range. It only works for short-term trading strategies on lower time frames from 1 min to four-hour time frames. Ideally, it is designed for timeframes lower than the daily time frame.
The market has an uptrend bias if it is above the midpoint, while the area below the midpoint has a bearish bias.
Enter a long trade in the price breaks above the channel. The triggering candle should close above the channel. Similarly, a bearish channel occurs when the price action breaks below and the triggering sell candle closes below the channel.
Intraday Channel Breakout Trading Example
The chart shows the price action for the Euro against the US dollar. The currency pair consolidates, and the indicator draws a channel. The price moves above the midpoint showing a bullish sentiment. The price goes ahead and breaks above the channel.
Similarly, when the price moves below the midpoint and breaks below the channel, it’s a tell-tale sign of price reversals. You are looking to open a short position.
Intraday Channel Breakout is an ideal indicator for trading the Asian range. It gives accurate trade entry points.