Learning to catch High Probability Breakouts
- Thread starter amitrandive
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Mukesh
The idea of support and resistance is very subjective.Different people can draw different zones at different times.
Also we can draw new support and resistance lines at any time,when the price stalls near a zone for a significant time.
The 350 level was marked on a weekly time frame.The 370 level is marked on a daily timeframe.Also remember that support/resistance is a zone not an exact level.
Check this post for a video on drawing support/resistance
http://www.traderji.com/technical-a...igh-probability-breakouts-31.html#post1007255
Hope this clears any confusion.
The idea of support and resistance is very subjective.Different people can draw different zones at different times.
Also we can draw new support and resistance lines at any time,when the price stalls near a zone for a significant time.
The 350 level was marked on a weekly time frame.The 370 level is marked on a daily timeframe.Also remember that support/resistance is a zone not an exact level.
Check this post for a video on drawing support/resistance
http://www.traderji.com/technical-a...igh-probability-breakouts-31.html#post1007255
Hope this clears any confusion.
...contd
4)High2 bull flags and low2 bear flags
Many traders find bar counting confusing because they want it to be perfect and clear. What they don’t understand is that the purpose of the market is to create confusion. It wants to spend as much time as possible at prices where both the bulls and bears feel that the price is fair.
The basic idea is that the market often makes a couple attempts to reverse a trend, which creates two legs. If those two reversals attempts fail, the market usually tries to go in the other direction. Since the other direction is a trend and it is now resuming, the countertrend traders know they are in trouble and will be quick to exit once that second attempt fails. They will also not be eager to try again. The result is a high probability continuation pattern trade that usually moves quickly. Traders often scalp these setups, but when the trend is still strong, they can swing part or all of their position. The patterns are often nested, with a smaller version forming in each of the two bigger legs. It does not matter whether a trader enters on the smaller version or the larger, as long as they use the correct swing stop.
Low2 sell signals on the 5 minute SPY chart. There was a large low2 bear flag (blue L1 and L2), which many call an ABC pullback. There was a smaller low2 as well (red lettering). The pattern was also a triangle because there was a third push up, creating the 2nd sell signal (red arrow).
High 2 buy signals on the daily EURUSD Forex chart. Note that every double bottom is a high2 buy setup (and every double top is a low2 short setup).
There were many variations of high2 buy signals, some smaller and others larger. The biggest one would be a simple high2 buy setup on the 15 minute chart. As always, it does not matter which bull flag a trader takes as long as he manages his trade correctly by using an appropriate stop (like a swing stop below the bottom of the most recent bull leg) and an appropriate profit target.
4)High2 bull flags and low2 bear flags
Many traders find bar counting confusing because they want it to be perfect and clear. What they don’t understand is that the purpose of the market is to create confusion. It wants to spend as much time as possible at prices where both the bulls and bears feel that the price is fair.
The basic idea is that the market often makes a couple attempts to reverse a trend, which creates two legs. If those two reversals attempts fail, the market usually tries to go in the other direction. Since the other direction is a trend and it is now resuming, the countertrend traders know they are in trouble and will be quick to exit once that second attempt fails. They will also not be eager to try again. The result is a high probability continuation pattern trade that usually moves quickly. Traders often scalp these setups, but when the trend is still strong, they can swing part or all of their position. The patterns are often nested, with a smaller version forming in each of the two bigger legs. It does not matter whether a trader enters on the smaller version or the larger, as long as they use the correct swing stop.
Low2 sell signals on the 5 minute SPY chart. There was a large low2 bear flag (blue L1 and L2), which many call an ABC pullback. There was a smaller low2 as well (red lettering). The pattern was also a triangle because there was a third push up, creating the 2nd sell signal (red arrow).
High 2 buy signals on the daily EURUSD Forex chart. Note that every double bottom is a high2 buy setup (and every double top is a low2 short setup).
There were many variations of high2 buy signals, some smaller and others larger. The biggest one would be a simple high2 buy setup on the 15 minute chart. As always, it does not matter which bull flag a trader takes as long as he manages his trade correctly by using an appropriate stop (like a swing stop below the bottom of the most recent bull leg) and an appropriate profit target.
..contd
5)Wedges: three pushes up or down
The traditional definition of a wedge is a converging triangle that slopes up or down, and traders expect the breakout to be in the opposite direction of the slope. They look for an upside breakout of a wedge that is sloped down, and for a downside breakout of a wedge that is sloped up. They are continuation patterns when they are pullbacks within trends, and they are reversal patterns when they are large and the context is right. When they are flags, they are small reversal patterns. For example, when there is a wedge pullback in a bull trend, the wedge is a small bear leg and traders expect that bear leg to fail and to reverse up.
In the broadest sense, a wedge is any pattern with three pushes that is sloped up or down. It does not have to be convergent and the third push does not have to exceed the second. As soon as there are two pushes, traders can draw a line connecting them and then they can extend the line to the right (a trend channel line). They will then watch for a reversal if the market approaches the line for a third time. The closer any pattern is to ideal, the more reliable it is because more computers will treat it as significant. However, traders should never lose sight of the underlying forces and should learn to become comfortable with every conceivable variation of every pattern. This will give them far more trading opportunities.
5)Wedges: three pushes up or down
The traditional definition of a wedge is a converging triangle that slopes up or down, and traders expect the breakout to be in the opposite direction of the slope. They look for an upside breakout of a wedge that is sloped down, and for a downside breakout of a wedge that is sloped up. They are continuation patterns when they are pullbacks within trends, and they are reversal patterns when they are large and the context is right. When they are flags, they are small reversal patterns. For example, when there is a wedge pullback in a bull trend, the wedge is a small bear leg and traders expect that bear leg to fail and to reverse up.
In the broadest sense, a wedge is any pattern with three pushes that is sloped up or down. It does not have to be convergent and the third push does not have to exceed the second. As soon as there are two pushes, traders can draw a line connecting them and then they can extend the line to the right (a trend channel line). They will then watch for a reversal if the market approaches the line for a third time. The closer any pattern is to ideal, the more reliable it is because more computers will treat it as significant. However, traders should never lose sight of the underlying forces and should learn to become comfortable with every conceivable variation of every pattern. This will give them far more trading opportunities.
@Amitrandive
Dear friend, what are your absolute final five chart pattern to look at when it comes to the thread titles subject?
You do well with this thread and I thought I may ask for an accumulation of your best patterns at this time, as following to many of them, our trading will maybe be bust (At least in my case as I also have to use option tools)
Take care / Dan
Dear friend, what are your absolute final five chart pattern to look at when it comes to the thread titles subject?
You do well with this thread and I thought I may ask for an accumulation of your best patterns at this time, as following to many of them, our trading will maybe be bust (At least in my case as I also have to use option tools)
Take care / Dan
@Amitrandive
Dear friend, what are your absolute final five chart pattern to look at when it comes to the thread titles subject?
You do well with this thread and I thought I may ask for an accumulation of your best patterns at this time, as following to many of them, our trading will maybe be bust (At least in my case as I also have to use option tools)
Take care / Dan
Dear friend, what are your absolute final five chart pattern to look at when it comes to the thread titles subject?
You do well with this thread and I thought I may ask for an accumulation of your best patterns at this time, as following to many of them, our trading will maybe be bust (At least in my case as I also have to use option tools)
Take care / Dan
My favourite patterns are Rectangular breakout,Double Top,Double Bottom,Pin Bars and Channels.
I am also open to learning new patterns.But not too complex.The other simple patterns may be Flags,Wedges,etc.
Last edited:
Dan
My favourite patterns are Rectangular breakout,Double Top,Double Bottom,Pin Bars and Channels.
I am also open to learning new patterns.But not too complex.The other simple patterns may be Flags,Wedges,etc.
My favourite patterns are Rectangular breakout,Double Top,Double Bottom,Pin Bars and Channels.
I am also open to learning new patterns.But not too complex.The other simple patterns may be Flags,Wedges,etc.
I disabled "Signatures", as I find it disturbing to read any signature or being linked to always the same threads or post from the same members again and again as a more or less daily visitor from this forum.
"Every day, Every Trade requires 100% Discipline"
Trading Business=99% Boredom and 1% Sheer Excitement
The Smarter I work, the Luckier I get.
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