Learning to catch High Probability Breakouts

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Rish

Rish

Well-Known Member
#4,056
#4,056
Rish said:
Tata Steel (future) Stiff Support 312, Breaks, then Major Support 306 / 286 / 275.40.

Close below 312 weekly basis, then again trend may be weak in the medium Term. 312 will be a major level as such..



The above levels are just for knowledge purpose and not a trading call.
Click to expand...
Tata Steel holded 312 and closed above 328.90, further break out above 336.40 ...

Now levels to be watched out 336.40 / 328.90 and 312...

The levels are for knowledge purpose and not a trading call.
 
M

mindgames

Well-Known Member
#4,058
#4,058
Recap of key takeaways from this thread so far [until #4057]. If I have missed something important or captured something incorrectly, please feel free to point out - so this can be corrected.

==============================================================================================

Over-riding principles
1. Determine position size based on how much you can afford to risk with peace of mind.
2. Analysis is fine but price has to be in tune with analysis. If analysis says top and market is going up, you shouldn't go short unless market action confirms analysis. Price is the KING.

==============================================================================================

Trading ideas
1. Buy when +DI in ADX is above 25 and MACD histogram has given minimum 3 consecutive Green bars above "0 " line. [Pg. 392]
2. Stocks making 52 week highs and lows can be good breakout candidates. Use it as a filter to find stocks breaking out of a trading range. Don't blindly bet on these. [AFL scanner available in post 1695, page 169]
3. Crude oil falling can lead to uptrend/downtrend in connected stocks. [Refer Pg.59, Post 581 for details]
4. CNX Alpha stocks are a good watch list for those not having strategies.
5. Look for consolidation breakouts. Rectangles and Triangles / Wedges are patterns you need to watch out for.
6. Find area on chart with ADX < 25 for at least 20 periods. Mark range on chart for corresponding period. Trade in direction of breakout and DMI. Examples posted in the thread based on weekly charts. Use ADX Divergence to identify exits [Pg 295]
7. Price above 20 EMA | Forming Higher Low | Rising Volume
8. Buy 2nd break from bottom - avoid first as bottom pickers may be stopped out
9. Bollinger Band - Buy when price closes above or near upper band. Cover at or near lower band.
10. Buy strength - use concept of Price Relative so that only stocks moving faster than index are selected for trading. Trade breakouts on Relative Strength line vs. Nifty. Eg. TL breakout of RS line. Use longer TF TL for this purpose (eg. Weekly)
11. Look out for trades based on monthly S&R and box breakouts as in such cases, stocks can turn out to be multibaggers if you are patient.
12. Pin bar at support/resistance - these can be Pivots, 20 EMA/SMA, Support/resistance areas on monthly/weekly TFs. These also offer good intraday opportunities.
13. Similarly, moving average crossovers at support/resistance areas can provide clues to breakouts.
14. Study sectoral indices as well to understand sentiments. Price pattern formations on sectoral index may throw up trade ideas on its constituents
15. Trading Parabolic Breakout and Symmetrical Triangle. This is an Intraday pattern where there is breakout > spike > symetrical triange > breakout. [Pg 112, Post 1115]

==============================================================================================

Identifying trending stocks
1. Higher High - Higher Low and Lower Low - Lower High are building blocks for trend trading
2. LT EMA is used to determine trend of the stock. ST EMA is used to determine its "value". Crossovers are used for entries.
3. Draw channels on LT charts and look for breakouts and retest of these
4. Importance of 20 EMA – whenever you enter, do so after break of 20 EMA as that indicates short term strength/weakness. Eg. Shorting after test of range / channel top followed by 20 EMA breakdown

==============================================================================================

Volumes
1. Breakout bars must be supported by above average volume. Volume > moving average to be considered significant for this purpose
2. Breakouts on low volume can still turnout to be winners - check if price sustains breakout levels.
3. Very high volumes at tops and bottoms may signify climax.
4. Decline and Increase in prices with receding volume may lead to reversals (end of trend cases)
5. If market has been increasing for a while, anemic price increase at high volume is a bearish sign.
6. After a decline, substantial volume with minor price changes points to accumulation, therefore a bullish indicator.
7. ALL Technical analysis should be applied stocks that are liquid. Validity is questionable in the case of illiquid stocks.

==============================================================================================

Breakouts
1. Notice what happens after breakout bar - Continues to break away / Consolidates in same direction / Unable to move further / Retracts and closes below body high of pivot. Try not to base your decision only on breakout bar - look at how subsequent bars behave.
2. Breakout and retest cases offer good risk to reward ratio. Some stocks retest breakout zone, some simply runaway. Best is to stick with stocks where retesting is in process. As it will imbibe discipline to 'not to catch' runaway stocks.
3. If while making the breakout, market has traveled a long way - better to wait for consolidation first as lot of bullish energy has been spent in breaking resistance.
4. Best breakouts are ones where there is some consolidation just below the resistance area and then the breakout happens
5. Breakout failures set up good trades in opposite direction - so be on the lookout by studying hourly/daily charts of stocks that are in consolidation/pullback after a breakout.

==============================================================================================

Others
1. Gaps are filled when the trend is on the correct side.
2. Gaps after accumulation/consolidation are breakaway gaps. Those at the end of a cycle after a trending phase are likely to be exhaustion gaps
3. When a TL is broken, wait for retest or HH/LL formation before entry.
4. Position size in downtrend should be lower than that in uptrend.
5. Buy low - Sell high means but at lower end of range and sell at higher end of range. Use higher TF for identifying range. So, in a rising trend, look to buy at support. In a falling trend, look to short at resistance. TLs can give indication of present trend.
6. Look out for bull and bear traps before committing a position. [Previous support turning resistance and vice versa]
7. Look for price rejection before you trade reversal patterns
8. If DMI does not make a new high, it could be a breakout failure [Pg.294]
9. Ending diagonal triangle pattern can signal trend reversal.
10. Track Broad Index ---> Sectoral Index ---> Stock trend ---> Decide entry
11. Always align to larger TF. Strength and/or weakness on higher TF (eg. Weekly, Monthly) will always show up on the lower TF (Eg. Daily). These are best trades - align to them at right juncture.
12. Always draw S&R from higher TF to lower TF.
13. Pivots are confirmed not when a low is formed but only after previous swing high is taken off (good pic at Pg.51, Post 508)
14. Look to take profits near previous support/resistance

==============================================================================================

Credits go to respective contributors :thumb:
 
Last edited:
amitrandive

amitrandive

Well-Known Member
#4,059
#4,059
mindgames said:
Recap of key takeaways from this thread so far [until #4057]. If I have missed something important or captured something incorrectly, please feel free to point out - so this can be corrected.

==============================================================================================

Over-riding principles
1. Determine position size based on how much you can afford to risk with peace of mind.
2. Analysis is fine but price has to be in tune with analysis. If analysis says top and market is going up, you shouldn't go short unless market action confirms analysis. Price is the KING.

==============================================================================================

Trading ideas
1. Buy when +DI in ADX is above 25 and MACD histogram has given minimum 3 consecutive Green bars above "0 " line. [Pg. 392]
2. Stocks making 52 week highs and lows can be good breakout candidates. Use it as a filter to find stocks breaking out of a trading range. Don't blindly bet on these. [AFL scanner available in post 1695, page 169]
3. Crude oil falling can lead to uptrend/downtrend in connected stocks. [Refer Pg.59, Post 581 for details]
4. CNX Alpha stocks are a good watch list for those not having strategies.
5. Look for consolidation breakouts. Rectangles and Triangles / Wedges are patterns you need to watch out for.
6. Find area on chart with ADX < 25 for at least 20 periods. Mark range on chart for corresponding period. Trade in direction of breakout and DMI. Examples posted in the thread based on weekly charts. Use ADX Divergence to identify exits [Pg 295]
7. Price above 20 EMA | Forming Higher Low | Rising Volume
8. Buy 2nd break from bottom - avoid first as bottom pickers may be stopped out
9. Bollinger Band - Buy when price closes above or near upper band. Cover at or near lower band.
10. Buy strength - use concept of Price Relative so that only stocks moving faster than index are selected for trading. Trade breakouts on Relative Strength line vs. Nifty. Eg. TL breakout of RS line. Use longer TF TL for this purpose (eg. Weekly)
11. Look out for trades based on monthly S&R and box breakouts as in such cases, stocks can turn out to be multibaggers if you are patient.
12. Pin bar at support/resistance - these can be Pivots, 20 EMA/SMA, Support/resistance areas on monthly/weekly TFs. These also offer good intraday opportunities.
13. Similarly, moving average crossovers at support/resistance areas can provide clues to breakouts.
14. Study sectoral indices as well to understand sentiments. Price pattern formations on sectoral index may throw up trade ideas on its constituents
15. Trading Parabolic Breakout and Symmetrical Triangle. This is an Intraday pattern where there is breakout > spike > symetrical triange > breakout. [Pg 112, Post 1115]

==============================================================================================

Identifying trending stocks
1. Higher High - Higher Low and Lower Low - Lower High are building blocks for trend trading
2. LT EMA is used to determine trend of the stock. ST EMA is used to determine its "value". Crossovers are used for entries.
3. Draw channels on LT charts and look for breakouts and retest of these
4. Importance of 20 EMA – whenever you enter, do so after break of 20 EMA as that indicates short term strength/weakness. Eg. Shorting after test of range / channel top followed by 20 EMA breakdown

==============================================================================================

Volumes
1. Breakout bars must be supported by above average volume. Volume > moving average to be considered significant for this purpose
2. Breakouts on low volume can still turnout to be winners - check if price sustains breakout levels.
3. Very high volumes at tops and bottoms may signify climax.
4. Decline and Increase in prices with receding volume may lead to reversals (end of trend cases)
5. If market has been increasing for a while, anemic price increase at high volume is a bearish sign.
6. After a decline, substantial volume with minor price changes points to accumulation, therefore a bullish indicator.
7. ALL Technical analysis should be applied stocks that are liquid. Validity is questionable in the case of illiquid stocks.

==============================================================================================

Breakouts
1. Breakout and retest cases offer good risk to reward ratio. Some stocks retest breakout zone, some simply runaway. Best is to stick with stocks where retesting is in process. As it will imbibe discipline to 'not to catch' runaway stocks.
2. If while making the breakout, market has traveled a long way - better to wait for consolidation first as lot of bullish energy has been spent in breaking resistance.
3. Best breakouts are ones where there is some consolidation just below the resistance area and then the breakout happens
4. Breakout failures set up good trades in opposite direction - so be on the lookout by studying hourly/daily charts of stocks that are in consolidation/pullback after a breakout.

==============================================================================================

Others
1. Gaps are filled when the trend is on the correct side.
2. Gaps after accumulation/consolidation are breakaway gaps. Those at the end of a cycle after a trending phase are likely to be exhaustion gaps
3. When a TL is broken, wait for retest or HH/LL formation before entry.
4. Position size in downtrend should be lower than that in uptrend.
5. Buy low - Sell high means but at lower end of range and sell at higher end of range. Use higher TF for identifying range. So, in a rising trend, look to buy at support. In a falling trend, look to short at resistance. TLs can give indication of present trend.
6. Look out for bull and bear traps before committing a position. [Previous support turning resistance and vice versa]
7. Look for price rejection before you trade reversal patterns
8. If DMI does not make a new high, it could be a breakout failure [Pg.294]
9. Ending diagonal triangle pattern can signal trend reversal.
10. Track Broad Index ---> Sectoral Index ---> Stock trend ---> Decide entry
11. Always align to larger TF. Strength and/or weakness on higher TF (eg. Weekly, Monthly) will always show up on the lower TF (Eg. Daily). These are best trades - align to them at right juncture.
12. Always draw S&R from higher TF to lower TF.
13. Pivots are confirmed not when a low is formed but only after previous swing high is taken off (good pic at Pg.51, Post 508)
14. Look to take profits near previous support/resistance

==============================================================================================

Credits go to respective contributors :thumb:
Click to expand...
Credit goes to you too for collecting all these in one place ,this can be printed and used a trading checklist/cheat sheet!!!
:clapping::clapping::clapping:
 
I

indianbank

Well-Known Member
#4,060
#4,060
Hi friends good evening as always
----------------------------------------
today i entered positions in 1.CUB 2.FINCABLE
------------------------------------------------------
MY next list of 52 week breakout
---------------------------------------
1.Alankit SECTOR: diamond cutting jewelry
2.GNFC SECTOR: fertilizer
3.Muthootfin sector:finance
 
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