Strategy: Major breakout (NQ, ES)

The Major breakout strategy is one half of the Reversal-Breakout strategy. However, I have decided to split this strategy up into it’s composite parts to be able to delve into more detail.

The Major Breakout Strategy is one of my go-to approaches for trading NQ and ES futures. It’s not a strategy you can apply multiple times a day—this setup occurs only once per day or sometimes every two days. Timing is critical, as the window for executing this trade can vary widely, typically between 10:00 and 22:00. If you miss the moment when all the indicators align, you’ll have to wait patiently for the next occurrence.

This strategy revolves around identifying major support and resistance zones on a 5-minute chart. These zones, which I draw manually (usually in light blue), are based on the day’s highest highs and lowest lows. The precision of these zones is crucial, as they serve as the foundation for spotting the breakout.

Here’s how it plays out:

1. The Breakout: Price bursts through a major support or resistance zone, signaling the start of the move.
2. The Rebound: After the initial breakout, price pulls back into or slightly below the blue zone.
3. The Runaway Move: Following another minor pullback, price begins a strong directional move, often traveling 100+ points in a relatively straight line.

Catching the breakout at the right time and position is the key to maximizing profits. A well-timed entry can lead to substantial wins, as the momentum behind these moves often provides clear opportunities for traders who are prepared.

This strategy rewards discipline, patience, and precision. It’s not about chasing trades but waiting for the market to present the perfect setup—then capitalizing on it with confidence.

The below image shows price action on friday 06-12-2024 where I traded the strategy Price shot through the major resistance level (light-blue), pulls back, then follows a false breakout after which the real breakout follows.

My position is shown in this third image. Clearly, my entry point wasn’t perfect, reasoning for this can be found in the trading journal of 06-12-2024. However, I was quite convinced i caught the correct movement. Also, if this was not the right move, I would have gotten out and in again when the correct move did occur. As you see, the volume on the final breakout was huge, signaling a significant price movement. This trade netted my a pretty $3,100 when I got out just below the purple zone. The full move would have been around $4,000.

Getting out

While getting in at the right time is the most important, getting out at a good time also is important for the P&L you will end up with after the move. The Major breakout can take between 30 minutes to the rest of the entire day (6+ hours). After reaching the extreme of the move, price will either consolidate in a sideways motion, or shoot down fast. If price shoots down you could easily loose 30-40% of your profits. A sideways consolidation allows you to wait for the next candle up and then get out at it’s extreme.