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Breakouts and False Breakouts (I)

  Breakouts rebateforexfee False Breakouts  Breakout Trading  What Forex Rapid Rebate a rebateforex and how do I trade with breakout quotes?   and you in adolescence to squeeze the pimple experienced by the "breakthrough" different, in the trading world we say breakthrough is another thing    when the cashback forex out of a horizontal finishing trend, or out of the range finishing state, breakthrough ForexRapidRebate may later appear  breakthrough market may also be The breakout may also be seen when the price crosses a particular price level, such as support and resistance, pivot points, Fibonacci levels, etc. With breakout trading, our goal is to enter the market the moment the breakout occurs and follow the direction of market movement until the market volatility is gone Volatility, not volume  Youll notice You will notice rebateforexbroker, unlike trading stocks and futures, you cant learn the volume of the forex market For trading stocks or futures, the volume is very useful in determining the market breakout, so the downside of trading forex is also that we have difficulty using volume data Based on this downside of forex trading, we rely on not only good Risk management methods, but also since we need some guidelines for position adjustments when a potential breakout occurs If there is a large price movement in the short term, then market volatility will be very high On the other hand, if there is relatively little price movement in the short term, then market volatility is also low Although it is tempting to enter the market when prices are moving faster than a bullet You will also find that you will become more anxious and stressed because, if you make the wrong decision at this point, you will lose a lot of money The higher market volatility is what attracts most traders, but it is also this high volatility that has cost many traders their money Our aim is to take advantage of the markets volatility for steady profits Instead of following the market mainstream and entering the market when there is great volatility, you can pay more attention to the currency pairs that are less volatile In this case, you can arrange your positions ahead of time and be ready when the breakout market appears and the market experiences significant volatility The measurement of volatility  When we are looking for good breakout trading opportunities, we are able to use volatility Volatility measures the overall price fluctuations over a period of time, and this information can be used to detect potential breakout quotes There are a number of indicators that can help us to measure the current volatility of the exchange rate When we are looking for breakout opportunities, the use of these indicators will help us to a large extent  1, moving averages Moving averages are probably the most common technical indicator used by traders, and although the indicator is simple to use, the information provided is priceless Simply put, moving averages measure the average movement of the market over X period of time, and X can be set arbitrarily by your own preferences For example, if you prefer to use the 20SMA in the daily For example, if you prefer to use the 20SMA on a daily chart, then that average shows the average price movement over the last 20 days Of course, there are other categories of moving averages, such as exponentially weighted moving averages, but the purpose of this lesson is not to discuss these details in more detail If you want to learn more about moving averages, or if you just need a review of this knowledge , you can go back to our fourth grade course to study  2. Bollinger bands Bollinger bands are a very good tool for measuring market volatility, because thats what they are strong at Bollinger bands usually consist of 2 lines with a standard deviation of 2. These two lines are distributed above and below the moving average over X period of time, and X is also set by you  nbsp;For example, if you set the X value to 20, then you will get 20SMA and the other two lines a line with a standard deviation of +2 and another line with a standard deviation of -2 When the Bollinger band opening contraction, it indicates a decrease in volatility; when the Bollinger band opening expansion, it indicates an increase in volatility  3, ATR indicator  The last available indicator is the True Average Region indicator (ATR) The ATR indicator is also a very effective indicator for measuring volatility because it tells us the average volatility range over the past X period of time, X is also set by our preferences For example, if you set the ATR indicator to 20 on the daily chart, then it shows the average trading range over the past 20 days Situation  When the ATR is falling, it indicates that market volatility is decreasing, while when the ATR is rising, it indicates that volatility is increasing Categories of breakouts Before we trade breakout quotes, it is necessary to know that there are two main types of breakout quotes: 1. Sustained breakouts 2. Reversal breakouts The breakout of A clear judgment of the category can help you grasp the real development of the overall market breakout needs to be paid enough attention to, because it means that you are trading the currency pair supply and demand is changing this change can extend the previous trend of the currency pair, and provide you with a good opportunity to further profit sustained breakout there are times when the market experienced a big one-sided market After the market has experienced a large one-sided market, it may fall into a sideways consolidation trend At this point, buyers and sellers take a breather and determine what they should do next The result is that you will watch the currency pair go through a period of sideways consolidation  If traders believe that the initial trend is the right direction for the market and may continue in the previous direction, then the result is that there may be a sustained breakout  nbsp; Reversal breakout Reversal breakout also occurs after the exchange rate has experienced a round of large unilateral market, followed by the same price shows a sideways finishing pattern  The only difference is that after a period of sideways finishing, traders believe that the previous unilateral market trend has tended to end, and to push the price in the opposite direction of the fluctuation result is that The exchange rate shows a reversal breakout pattern  False breakout Now, you may be very tempted to make a breakout trade, but you must remain vigilant Just like Kobe will make fake moves to deceive the defenders, the market may also deceive you and send you false breakout messages When the price breaks through a certain horizontal level, such as support, resistance, triangle pattern, trend line etc., but does not accelerate along the direction of the previous breakout fluctuations as opposed to this, the price then quickly reverse and enter the previous trading range again  The best time to enter a breakout trade should be to wait until after the initial price breakout and retracement, to determine whether the retracement of the price makes a new high or low, depending on the specific direction you are trading   Another way to avoid false breakouts is to not enter when the price first breaks through, but to observe to see if the price will continue to fluctuate in the direction you expect, so that your chances of winning the trade are much better The shortcoming of this method is that if the price accelerates without hesitation after the breakout, you may miss the best opportunity to take profits Breakout identification In fact, we can identify breakouts with just our Once you are familiar with the possible signals of a breakout, you will be able to quickly identify potential trading opportunities Technical Patterns Now, you should get into the habit of looking at the graphs and identifying the graphical patterns that will signal a reversal of the breakout The following are some of the relevant graphical patterns: - Double tops and double bottoms and double bottoms - head and shoulders tops and head and shoulders bottoms - triple tops and triple bottoms If you need more information, you can review our previous courses on graphical patterns In addition to graphical patterns, there are a number of tools and indicators that can be used to identify reversal breakouts trendlines  nbsp;The first way to identify a possible breakout is to draw a trend line on a technical graph, the method is simple, you just need to draw a straight line along the current direction of the price run  When drawing a trend line, if you can connect the two tops or bottoms of the price, it is best if the more tops or bottoms the trend line is connected to, the stronger the trend line is  So, how do you use trendlines to trade breakout quotes? When the price touches the trend line, only two things can happen, the price either bounce back from the trend line and continue the previous trend, or break the trend line and trigger a reversal of the trend all we need is to take advantage of the breakout market However, the trend line alone to determine the breakout market is not enough, the use of one or more of the technical indicators we introduced earlier in this lesson can provide you with great help  ; As the chart shows, with the EUR/USD falling below trendline support and the MACD indicator showing weakness combined with this information, we have more reason to say that the breakout market will depress the EUR/USD to continue lower and we should choose to short the pair Channel Another way to identify breakout opportunities is to draw a trend channel The trend channel is drawn in a similar way to the trendline The only difference is that after you draw the trend line, you need to draw another line parallel to it  The channel is very useful because you can identify breakouts on either side of the channel The way to use the channel is the same way we use the trend line, that is, wait until the price touches one of the channel lines and combine it with technical indicators to determine the validity of the breakout, which in turn helps We make the appropriate operating strategy  As shown, the MACD indicator issued a strong bearish signal, while the EUR/USD fell below the lower rail of the channel this is a rare shorting opportunity!  Triangles The third way to identify breakthrough opportunities is with the help of triangle patterns When the market gets rid of the oscillating market and starts to maintain a narrow range within a narrow range, triangle patterns are announced to form Our aim is that when the market has a consolidation pattern, we can adjust our positions accordingly so that when the breakthrough market occurs, we can catch the ensuing trend market  nbsp;There are three types of triangle patterns: 1, ascending triangle 2, descending triangle 3, symmetrical triangle Ascending triangle When the price lows continue to rise, but always difficult to break through the upper pressure line resistance, then the formation of ascending triangle ascending triangle to give us the signal is that the market is gradually more long forces than short    nbsp;Ascending triangle gives us more information is that every time the price touches a certain height, there are traders who believe in selling at that level, which leads to the price falling back from that level on the other hand, there are other traders who believe that the price should go higher, and as the price starts to fall, they will buy at a higher price than the previous low The result is that the tug-of-war between the long and short sides, this The result is a tug-of-war between the long and short sides, a war that will eventually end with one side winning  Given that ascending triangles usually give bullish signals, what we are looking for is an upside breakout When we see the exchange rate break above resistance, the most logical decision would be to go long  Descending triangles Descending triangles run in the opposite direction of ascending triangles to the buyer pressure, the result we see is that the price highs continue to go lower and form a strong support level  descending triangles are usually bearish to take advantage of this, we can choose to go short when the price falls below the support level  symmetrical triangles the third triangle pattern is symmetrical triangles and ascending triangles to form a horizontal resistance level In the case of symmetrical triangles, the combined forces of market longs and shorts push the price highs ever lower and lows ever higher, eventually pushing the exchange rate to gather in the middle of the apex  and ascending triangles are usually bullish and descending triangles are usually bearish unlike hedging triangles which have no clear directional preference you should be prepared for the exchange rate to move up or down You should be prepared for fluctuations in either direction  In the case of symmetrical triangles, the ideal way to make orders is to set up selective orders (OCO), not sure what OCO orders mean? Back to our kindergarten course to see the explanation of the type of order it  In this example, the GBP/USD upside breakout trend, the exchange rate also triggered a buy order Simple understanding of the triangle breakout method To help you remember the different kinds of triangle pattern breakout situation, or lets take a pimple to do the analogy it    nbsp;Ascending triangles usually have an upward breakout, so when you think of an ascending triangle, think of the situation when you squeeze a pimple on your forehead Descending triangles usually have a downward breakout, so when you think of a descending triangle, think of the situation when you squeeze a pimple on your chin Both upward and downward breakouts are possible in symmetrical triangles occur so when you think of symmetrical triangles, think of squeezing a pimple on your off-duty and forehead A simple summary is: Ascending triangle = squeezing a pimple on your foreheadDescending triangle = squeezing a pimple on your chinSymmetrical triangle = squeezing a pimple on your forehead or chin 

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