Here is the logic behind this strategy. Since we are using the previous high/low on the daily candles, this also means we are using the widest range of support/resistance in a 24 hour period. This means that as price approaches these key s/r levels, price will either breakout, or fail to hit that level. If it fails to hit the level, it will either breakout on the other side, or you will end up with an Intra-Bar setup. Another psychological explanation behind this is that most traders are seeing the previous high or low being approach, and they add to the fire causing an increase in volume which fuels the breakout.

"Hey AK, you missed something. What if price touches the high or low and then retraces against you? Doesn't that make this strategy suddenly very risky and unreliable?"

Hey there sneaky guy, I'm glad you asked. I'm more than happy to answer that for you. =]

You have to remember that the previous high and low that price is now approaching is the WIDEST support/resistance in the last 24 hours? Do you know what this is and how amazing this is ?!?!?!?! No? This means price has never hit the level since in the last day. Also, remember in my picture example? Round your pip down/up and add/subtract 1 pip to avoid those pesky pipettes causing your entry to end up getting stopped out.


"Also, Let's say it hits your entry, and starts to go your way and then reverses before your target it hit, what do you do then?"

Well, there are two possible answers. Either it actually is a loss and you shouldn't get bent out of shape about it, or.... you set your target profit way too high.

Example: Too high means you set a target profit that is generally higher than the average pip range on daily candles, like 300 pips or unlikely to have a breakout that high before a retracement.

Example: Is my trade a loss? Well, either you didn't do what I told you to about rounding and your entry was on pipettes or it is a loss. The trade is an acceptable loss if it breaks the high/low, your entry is hit and the price moves only 2-3 pips before it heads the other way and you get stopped out. This is OKAY, you will experience losses my enthusiastic trader! There are two things to remember about losses. Make sure that when you lose, you lose small and your wins are big, and make sure that your money management allows you to live to trade another day!


"AK, what does that have to do with the retracement?"
What an eye you've got there my fellow trader! I could tell you, or you could take my word for it. Both choices aren't good because you wouldn't understand it, and simply trusting me without understanding can cause you to make careless mistakes.

"Oh no! What do I do then?"
Never fear, young padawan. There is hope. You can look at the previous results. Remember, yes the daily candle will breakout on one side of the previous high or low, but you can get stopped out intraday. You enter with a stop of 10 pips, and the price retraces 15 pips, only to then to breakout a whopping 60 pips! You have to look at the previous results to answer all of these questions, never fear. I will tell you how to do so.

*EDIT* Apparently, as I've been told and have also found other threads pertaining to this, This is not an original creation. People have thought of it and shown their results of it. I hope that my Twist will make this strategy more profitable.


I recommend searching for the thread "DAYBREAK" by pipwoof. He has some great insight on this, and has even confirmed many of my observations and considerations.