Trading with Fibonacci Levels and Session Breakout

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Trading with Fibonacci Levels and Session Breakout


Understanding Market Sessions and Their Importance

The forex market operates 24 hours a day, divided into major trading sessions. Each session has its characteristics, impacting currency volatility and liquidity. The three main sessions are:

Session Time (UTC) Major Currencies Affected
Asian 00:00 – 09:00 JPY, AUD, NZD
London 07:00 – 16:00 EUR, GBP, CHF
New York 12:00 – 21:00 USD, CAD

Understanding these sessions helps traders identify the best trading opportunities based on currency movements and market activity.

Why Session Highs and Lows Matter

At the end of each session, the highest and lowest prices (high and low) act as key support and resistance levels. When the market breaks out of these levels, it often signals a strong move in a particular direction.

How to Trade Using Session Breakout and Fibonacci Levels

  1. Identify the Session High and Low:

  2. Wait for a Breakout:

    • If the price moves beyond the session high, it suggests a bullish breakout.

    • If the price moves below the session low, it indicates a bearish breakout.

  3. Use Fibonacci Retracement for Entries:

    • After a breakout, draw a Fibonacci retracement from the session high to the session low.

    • Look for retracement levels (38.2%, 50%, 61.8%) to enter trades in the breakout direction.

  4. Filter Trades with a Moving Average:

  • A slow moving average (e.g., 50 or 100-period MA) helps confirm the trend.

  • If the price is above the MA, focus on buy trades.

  • If the price is below the MA, focus on sell trades.

Example Trade Setup

  • Asian Session High: 1.2500

  • Asian Session Low: 1.2450

  • Breakout: Price moves above 1.2500

  • Fibonacci Retracement Levels: 1.2480 (38.2%), 1.2475 (50%), 1.2470 (61.8%)

  • Entry: Buy at 1.2480 with stop loss below 1.2450

  • Target: 1.2550 or higher

Conclusion

By combining session breakouts, Fibonacci retracement levels, and a moving average filter, traders can identify high-probability trades. This strategy can generate 3-4 quality trade setups per day, improving consistency and profitability in forex trading.

How to download session break out indicator ?

Follow link below, you can see how it work in strategy tester and test demo version.

https://www.mql5.com/en/market/product/133263



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