Tip 1: Identify possible scenarios and capture price patterns

No trader can know for sure whether the breakout is a success or a failure. Our job is to keep an eye on the market. Don't try to guess the direction of future prices.

You need to check regularly for price zones that are likely to fail to hold prices as the market approaches. This price zone can change frequently. It is like you are laying out scenarios for the price if you find the price ranges you define.

In addition, breakouts often occur in price patterns. So you need to understand how to use the pricing model for this. As shown below, the wedge pattern, the flag pattern is continuously broken:

Tip 2: Strong shadows appear in the break zone

We consider how the candle closes against the breakout zone:
  • A strong bullish breakout with a candle closing near the top
  • A strong bearish breakout with a close near the bottom
Another sign to consider is candle size. A larger real body shows a stronger breakout. However, the closing price is still the factor you should prioritize. As shown below:

Tip 3: Trading Breaking

You can find a price model on a large timeframe (for example H4) and then on a lower timeframe (eg H1) to find a smaller price pattern.

Because when the price makes a pattern on a large timeframe with a strong breakout, it is likely not a false break. It is likely that there will be a correction to continue in the direction of the breakout.

If the price fails to form a pattern after a breakout, it is very likely that the price will reverse and move in the opposite direction. In this case, there is a high chance that a false break will form. And for breakout traders, these types of signals should be avoided.

Remember the important steps:
  • Find the price model on large timeframes
  • Wait for a break
  • Wait for the price pattern at lower timeframes
  • Finally, join the trading
In the image below, you can see it very clearly the low timeframe set up with successful breakouts:

Tip 4: Use the trendline, moving average

Use these indicators to identify possible breakouts:
  • Moving away from the moving average shows the potential for a possible breakout as the price corrects.
  • The distance between short-term and long-term MAs indicates a market trend. When the market is trending breakouts are more likely to succeed.
Trend lines are also important because they help to more accurately identify a pattern or pattern breakout point.

Tip 5: The price closes and the real body is above the support resistance

Moving averages and trendlines are quite helpful in identifying support for resistance. In which you should consider tip 2 when combined with support resistance.

A few important notes
  • The best breakout happens when there is a close above the MA or trendline.
  • The best breakout happens when the real body is above the MA or trend line (at least 50%).
As shown below:

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