London Breakout

Setup

Setup rules:

1. Mark the Asian-session range (7 PM ET to 2 AM ET) — the high and low of price action during these 7 hours.

2. Range size check: The range should be reasonable — not unusually tight or wide compared to ATR. Aim for ranges 30-80 pips on EUR/USD or GBP/USD.

3. Wait for London open at 3 AM ET. Watch for the first 15-minute candle to break the range high or low.

Entry rules

Entry rules:

Confirmation entry: Enter on the close of the first 15m candle that breaks out of the range. Long on a break above the high; short on a break below the low.

Avoid the trap: If price breaks one side, retraces back into the range, then breaks the OTHER side — that's a stop-hunt sequence. Wait for sustained close outside the range on the second attempt, or skip the day.

News filter: Skip the strategy on major news days (UK CPI, ECB meeting, etc.) that drop within the London open window. News-driven breakouts have different dynamics.

Trade management

Trade management:

Stop loss: The opposite side of the Asian range — i.e. if long on the breakout above the range high, stop below the range low. Plus a small buffer.

Target: Often 1x to 2x the size of the Asian range. So a 50-pip range targets 50-100 pips of directional move. Conservative traders take 1x; aggressive traders hold for 2x.

Time exit: If the trade hasn't moved 50% toward target by the NY open (8 AM ET), close it. The London directional impulse usually plays out within 5 hours.

Pros and cons

Pros: Mechanical rules — easy to backtest and execute. Targets a high-volume directional window (London open). Works on multiple liquid pairs.

Cons: Stop-hunt false breakouts are common (~30% of days). Requires being awake at 3 AM ET for US-hours traders. Range sizes vary widely so the strategy needs filter rules.

Best pairs: EUR/USD · GBP/USD · EUR/GBP. More context in the forex glossary, or see strategies stacked on real charts in the trading blog.

London Breakout FAQ