I trade using a short term box breakout strategy. This is a very subjective strategy that looks for a two things:
1) A zone of consolidation, where price cannot go higher, and cannot go lower. This is our box.
2) An alignment of technical, fundamental, and market sentiment to gauge direction
I will go more indepth into my breakout strategy, so that you will have a better understanding of how and why this works.
A market is in consolidation 75% of the time. Meaning in this time, it has no direction. It just oscillates back and forth until one is decided. This is also known as market noise. When it figures out its direction, it either jumps up or down rapidly, until it runs out of steam and re-enters consolidation. My theory is that the market jumps from each step (the box) to the next. My breakout strategy is to trade these steps from one box of consolidation to the next one.
Thats pretty much it! Determining which direction price will break to, and the strength of that move, is all dependent on market sentiment and short term fundamental news that is mixed along with technical trading. My average trade lasts four hours, so I essentially hunt out spikes in the market place that are more predictable. Developing market bias is CRITICAL to success of this strategy! It helps you spot real breakouts from false ones! Here are pictures/examples of what this breakout trading looks like on my actual charts: