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Breakouts

💥 3 Types of BreakoutIn trading, the term "breakout" refers to a price movement that "breaks" past a certain level or range. It's important to note that breakouts can be false, meaning the price could reverse its movement after the breakout. Hence, traders often use confirmation techniques to confirm the validity of a breakout. A breakout is a potential trading opportunity that occurs when an asset's price moves above a resistance level or moves below a support level on increasing volume. The first step in trading breakouts is to identify current price trend patterns along with support and resistance levels in order to plan possible entry and exit points. Once you've acted on a breakout strategy, know when to cut your losses and re-assess the situation if the breakout sputters. As with any technical trading strategy, don't let emotions get the better of you. Stick with your plan and know when to get in and get out. 📈3 Key things to know about Breakouts📉 📍A breakout in the stock market refers to a situation where the price of a security moves beyond a pre-defined support or resistance level, accompanied by an increase in trading volume. Traders often take advantage of breakouts by entering a long position when the price surpasses resistance or a short position when it falls below support. This movement beyond a price barrier often leads to increased volatility and a trend in the direction of the breakout. 📍Breakouts are highly valued as a trading strategy because they can signal the beginning of heightened volatility, substantial price movements, and major trends. This phenomenon can occur in various market conditions and is particularly noticeable in the case of channel breakouts and price pattern breakouts, such as triangles, flags, or head and shoulders patterns. As volatility contracts during these periods, it typically expands once the prices move beyond the established range. 📍Breakout trading can be applied to various trading styles and timeframes, including intraday, daily, or weekly charts, making it a versatile strategy for day trading, swing trading, or any other approach. 🔹 Trend Line Breakout: This occurs when the price breaks past a trend line that has been connecting a series of lows or highs. 🔹 Support and Resistance Breakout: This occurs when the price breaks past a significant level of support or resistance. 🔹 Flag and Pennant Breakout: This occurs when the price breaks past a flag or pennant pattern, which is a short-term consolidation pattern. 🔹 Rectangle Breakout: This occurs when the price breaks past a rectangular price pattern, which is a pattern of price congestion. 🔹 Volume Breakout: This occurs when the volume of trades surpasses a significant level, indicating a potential change in trend. It's important to note that breakouts can be false, meaning the price could reverse its movement after the breakout. Hence, traders often use confirmation techniques to confirm the validity of a breakout. 👤 @AlgoBuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work, please like, comment and follow ❤️
Education
by QuantVue
20
Most Misguided PatternsHello Traders! Welcome back to another trade with Analyst Aadil1000x. Today I am posting some education posts which I found necessary to post and share with the public. Have you ever wondered if you figured out a pattern perfectly and try to trade it and you lost and then you wait for the same pattern to reappear and try to trade that pattern in a more perfect manner and you still lose? The reason is you have been taught wrong. Nearly 100% of the patterns that are roaming on the internet are wrong and it will lead to a loss. I have posted some patterns to make money easily. Trading is a game of probability and if you trade my way then the win probability will be higher than 70% and if you follow the traditional way then I am sure your probability will not be more than 30%. Don't forget to hit the like button and follow to stay connected
Education
by Aadil1000x
1
❌ False Breakout PatternsA breakout that failed to proceed past a level, leading to a "false" breakout of that level, is referred to as a "false breakout." One of the most essential price action trading patterns to learn is the false double bottom and double top patterns, as a false-break is frequently a very strong indicator that price may be changing direction or that a trend may soon resume. False breakouts occur in all market scenarios, including trending, consolidating, and counter-trending. Trading Tips To Respect: ✅False breakouts can happen in markets that are trending, range-bound, or going against the trend. Watch for them in all market conditions since they frequently provide insightful hints about the direction the market will take. ✅Trading against a trend can be challenging, but one of the "best" approaches is to watch for a clear false breakout signal from a significant support or resistance level, as in the last example above. ✅False breakouts provide us with a "window" into the "fight" between expert and amateur traders, allowing us to engage in trading alongside them. Trading will appear to you in a different light if you can learn to recognize and trade false breakout patterns. 👤 @AlgoBuddy 📅 Daily Ideas about market update, psychology & indicators ❤️ If you appreciate our work , Please like, comment and follow ❤️
Education
by QuantVue
2
⭕️WHAT IS A FALSE BREAKOUT❓ ⭕️False-breakouts are exactly what they sound like: a breakout that failed to continue beyond a level, resulting in a ‘false’ breakout of that level. False breakout patterns are one of the most important price action trading patterns to learn, because a false-break is often a very strong clue that price might be changing direction or that a trend might be resuming soon. ⭕️A false-break of a level can be thought of as a ‘deception’ by the market, because it looks like price will breakout but then it quickly reverses, deceiving all those who took the ‘bait’ of the breakout. It’s often the case that amateurs will enter what looks like an ‘obvious’ breakout and then the professional’s will push the market back the other way ⭕️A false breakout is essentially a ‘contrarian’ move in the market that ‘flushes’ out those traders who may have entered on emotion, rather than logic and forward thinking. ⭕️Generally speaking, a false-breakout happens because amateur traders or those with ‘weak hands’ in the market will tend to enter the market only when it ‘feels safe’ to do so. This means, they tend to enter when a market is already quite extended in one direction (and it’s about ready to retrace) or they try to ‘predict’ a breakout from a key support or resistance level too early. Professional traders watch for these missteps by the amateurs, and the end result is a very good entry for them with a tight stop loss and huge risk reward potential. ⭕️It takes discipline and a bit of ‘gut feel’ to know when a false-break is likely to occur, and you can never really know ‘for sure’ until after one has formed. The important thing, is to know what they look like and how to trade them. 🛑Which we will discuss in the next article, If you like this one❗️ Dear followers, let me know, what topic interests you for new educational posts?
OANDA:BTCUSDEducation
by SignalProvider
8
How to differentiate a fake-out from an actual break-outHappy Friday, sorcerers. Welcome on another educational post by Investroy! The trading and investing industry is a difficult one to succeed in as it has various complex details that you need to dig into both from technical and psychological perspectives. Predicting the price movement and understanding the logic behind it may be challenging at first. But as time passes and you gain experience, you understand the science behind price action and make more logical decisions. Today, we will talk about a rather puzzling issue faced by many beginning and experienced traders: the theme of differentiating fake price movements from real ones. Although, it is not always possible to separate the two to the full extent, it is feasible to build a plan around it and stick to it on a consistent basis. A fake-out is a failed attempt of the price to break above/below a key zone. Very often, it is associated with liquidity grabs and Stop Loss hunts. To demonstrate, looking at the illustration pictured on the chart, you can see how the price attempts to continue its bullish moves, but fakes out from the sideways-moving range and re-enters the borders of it instead. On the contrary, a breakout happens when price successfully penetrates a key level and continues its impulsive moves in the same direction Now, the question is: how to distinguish a real breakout from a fake one? Firstly, it has to be kept in mind that what goes up, must come down. In trading terms, after an impulsive move, a correctional one should come; after a breakout, a re-test should happen before continuing impulses. In order to identify whether a breakout is a fake or a real one, we should always look for a re-test of the penetrated zone after a break is completed. However, you have to keep in mind that it is not a 100% fact that a re-test will happen every time. Sometimes, breakouts will be so impulsive that price will not retrace back to re-test a penetrated zone. Nothing is 100% accurate in trading. Not every breakout will lead to a re-test before impulsive continuations. Not every fake breakout will seem like a fake-out at first. However, waiting for a re-test of a broken zone is a good way to evade fake breakouts and capture high risk-to-reward trades and opportunities. To conclude, if you want to make sure you don’t get faked out and liquidated, always wait for a re-test of a penetrated level before forming biases and executing positions.
BITSTAMP:BTCUSDEducation
by Investroy
9
How to trade Breakout/Breakdown from consolidation pattern?1) What is a consolidation? Consolidation means when the price of a stock or security moves sideways within a range. In this pattern the price makes the same highs and/or same lows. The highs form a resistance level, and lows form a support level. The longer the consolidation is, the stronger the breakout/breakdown will be. When the price is moving within the range you can not really predict if it will go up or down, you always have to wait for the breakout/down to enter the trade. Once the channel is broken it usually leads to a stronger up/downtrend. Breakout We are talking about Breakout pattern when the price that has been moving within the range of the consolidation pattern breaks above the previous resistance line. At this momentum, when we have a confirmation candle, there is a high probability that it can be a start of a new uptrend, and we can enter the trade. Breakdown In case of a Breakdown, the price is moving downwards, and not only hit but breaks out of the support level. We need a confirmation candle to ensure that there is a high probability that bearish momentum will trigger the start of a new downtrend and it is a good time to enter short. 2) What are the valid consolidation patterns? Consolidation pattern does not mean in every case that the price must make the same highs and the same lows at the same time. For a Breakout pattern from the consolidation we want to see a strong, flat top resistance line that is tested three times or more. The price can either make the same lows or higher lows. On the other hand, when we are talking about a Breakdown from the consolidation, we are always looking for a strong support line that is tested at least three times before. In this case, the consolidation pattern can be either making same highs or lower highs. 3) How to identify a Breakout/Breakdown momentum and which indicators to use? We only want to enter the trade on a breakout/breakdown with a high probability of succeeding and for that we always want to see a confirmation candle after the price breaks above or below the range to avoid false breakouts. For a Breakout, the candle must be bullish and open and close above the resistance level and it must be near the 20EMA. In case of a Breakdown the bearish candle body must open and close below the support line and the breakout candle must be near or touching the 20EMA. Indicators (examples) Force Index (13) measures the strength of the volume. When the Force Index is above the zero line, that tells you that the market is bullish. If the price goes under the line, the price is bearish. So, when we want to go long, make sure that the Force Index is above the signal line and it’s rising. When we want to sell, then the Force Index should be under the signal line and falling. or MACD (12,26,9) When the MACD line is above the signal line, it means that the momentum is bullish (good if you want to go long) if it goes under the signal line, means the market is bearish (great time to enter short).
Education
by vf_investment
1
CADJPY READY TO TAKE FLIGHT?On the daily CAD-JPY is in a very strong uptrend so my bias is currently BUY. Considering all of that on the 4 hour time frame it is at a level of support which does not necessarily mean buy but I'm waiting for confirmation going forward to see what price action looks like. Currently sellers seem to have more control but during the London session this will be a good pair to look at. Possible break and pullback for the (sell) at area of support. or Bounce at support. Feedback is welcome. Please follow I will be posting more analysis often.
Long
by MentalMir
GBPUSD short but be aware of US CPI volatilityLooking for some reversals from the previous signals. Yesterday we didn't get any triggers, which signals a change in trend in itself. Today is US CPI so I am expecting some volatility and for traders to get stopped out. DXY could go higher and break through the relative equal highs, this could amount to just a stop run and at this point we wait to see if its a liquidity grab or not. GBPUSD has a couple of imbalances on the way down to fill but there is also one above. The reason I favour GBPUSD shorts today is due to higher cpi readings, leading to rate hikes, leading to dollar strength. Technically the DXY also made its weekly low (so far) on Tuesday and this is known as turnaround Tuesday. USDJPY confirms a possible long USD and GBPJPY confirms a short pound. But that makes the Yen a problem.
Short
by Macrobriefing
2
NBIX Breakout TradeNBIX is in the biotech sector which I have been highlighting for several months as one of the strongest areas in the market. After emerging from a textbook breakout pattern in early August, shares have consolidated in a tight handle formation. If you look at the relative strength line at the top of the chart, you will notice three pink dots over the last several days. These show the RS line making new highs. Although the stock drifted sideways, the rest of the market has been in an ugly correction, so NBIX is actually holding up better than most other names. I'm looking for a breakout on volume above its down sloping trendline.
NASDAQ:NBIXLong
by rossgivens
NASDAQ - 1D - The 3 converging signals. This tutorial looks at the Daily chart main technology index in the World, NASDAQ. When evaluating its prices, NASDAQ has been down-trending in the past 8 months, in a steep decline. It started from its All-Time-High (ATH), when it held the 16700s level on the 21st of November 2021, sinking over 34% towards the 11300 level on the 16th of June 2022. However, since its recent low, the NASDAQ kept increasing in price. In the last trading week (8th - 12th of August 2022), prices formed an interesting technical pattern that could give way to a prolonged upward movement. Today, a new candlestick formed, sitting right on the 200 EMA line. I have highlighted 3 significant patterns which are converging. These patterns increase the probability of such upward movement, leading me to believe in a potential bullish movement: 1- Downtrend Breakout 2- Gap Up or Rising Window 3- 200 EMA (Exponential Moving Average) Breakout To understand the technical patterns I am discussing, it is necessary to identify two indicators within the chart. These indicators are the 200 EMA (Exponential Moving Average), which is the red line following the price, and the Downtrend Line, which is the purple line connected to the recent highs. I have drawn a red circle to point out where the signals converged.  1- The Downtrend was acting as resistance for over 7 months, from December 2021 until the 10th of August. From then, the Downtrend line will act as a support for the potential upcoming upward movement. 2- The Gap Up in price happened between the market close on the 9th of August to the market open on the10th of August. It brought the price up on a powerful movement, ignoring the downtrend resistance line and sitting on top of it, transforming it into a support line. 3- Major investors and hedge funds use the 200 EMA as a bullish/bearish indicator and a strong resistance/support level. The last candlestick (12th of August) closed above the 200EMA line, which did not happen for over 4 months. To conclude, the convergence of the 200 EMA plus the down-trend breakouts along with the rising window form an interesting signal that suggests the downtrend might run out of steam. Happy Investrading!
NASDAQ:NDX
by dmelchiades