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Thread: How can I predict "Trend breakout"?

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    Arrow This post is sponsored by a content payout program available to anyone to participate. How can I predict "Trend breakout"?

    As we all know trend breakout is one of the most dangerous thing for traders so how can I easily predict trend breakout before it happens?

    Though trading on financial markets entails high risk, still it can generate extra income on condition that you apply the right approach. By choosing a reliable broker such as InstaForex you get access to the international financial markets and open your way towards financial independence. You can sign up here.


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    How can I predict "Trend breakout"?

    7F99B4A1-597E-497C-9A70-E806993903DD.jpeg

    Before talking about a breakout and how to spot one, let’s talk about technical analysis in general. Reading a price chart is basically like playing piano. Hence, a lot of us have the wrong idea of how this analysis works. To buttress this point, it is safe to say that more than ninety percent of those who learn piano quit before they reach peak. This is due to impatience and lack of practice, if you don’t spend enough time to practice you won’t reach the proficient level. With adequate practice over the course of the career, they improve and begin to recognize different patterns.

    Some even become so good that they don’t need to look at the key before they play. This is possible before the human mind is the most powerful pattern recognition program in the world. Same thing is applicable to forex trading, the level at which we learn and perform makes it easy for us to recognize different patterns and their resulting level. How does this relate to trend breakout? There’s no secret or special indicators that can be used to spot breakout, you can only do that if you’ve spent enough time practicing and able to recognize different chart formations and patterns.

    Some useful tips

    You might be thinking all these don't help me, but it’s the reality. However the first thing you must do is ascertain the direction of the overall trend. You can do it by drawing your support (trendlines) and resistance or simply making use of some trend based indicators (such as moving averages). But don’t contradict yourself, the simpler the better because most of the indicators are lagging not leading indicators. After finding the market trend, you can draw a simple trend line based on the pattern. But first it is important to understand different patterns so you know what to expect.

    44947E24-5E88-4D62-9A49-18679E18BE2B.jpeg
    EURUSD breakout


    Furthermore, make sure you mark all the key levels so you know where the market will likely retest. In a downtrend market, you should look for the break of the lower low, the place a SL above the new low high. The same approach can be applied to an uptrend market. The problem with most trend markets is that there will be a lot of consolidation. So if you can handle it you should trade multiple currencies; while some are trendy – some might be consolidating. And also, try and trend para with low spreads because they’re often the ones with high volume and volatility.

    614CF29D-AE62-40F9-8CCA-DEB76DD8A393.jpeg

    Though trading on financial markets entails high risk, still it can generate extra income on condition that you apply the right approach. By choosing a reliable broker such as InstaForex you get access to the international financial markets and open your way towards financial independence. You can sign up here.


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    HOW TO IDENTIFY A TREND BREAKOUT

    One of the profitable trading method in the forex market is to identify and trade a trend breakout. A trend breakout could occur as a continuation of a previous trend and it could also show up as a start of a new trend, whichever way it comes, it can be quite profitable to trade.


    One thing that a trader must first understand as with trading a breakout is that it is only possible after a period of consolidation in the forex market, something that is much more related to a range bound trend. A breakout means a kind of freedom from a certain space, but this time around reference is made to the movement of prices in the forex market. A breakout occurs because price has tested a certain support and resistance zone or channel over a period of time and has eventually found strength to move beyond that zone. A breakout usually signals the beginning of another strong trend which could come as an uptrend or downtrend.


    Technical analysts are those who really trade breakouts that occur in the forex market the most since they are the ones plotting important zones on the market chart. When neither buyers nor sellers have absolute control of the market, the market will usually move to a point where it consolidates and continues to test the same high and low for the time being until either the sellers or buyers take control of the market.


    One way to identify a trend breakout is to make sure to correctly draw out the support and resistance zone during a period of consolidation. As soon as this is completed, traders should pay attention to candles that forms on the these zones (support and resistance) as well their close. If a candle closes significantly outside of a zone, it could be an indication of a breakout and the start of a new trend. Entry could be placed here with proper risk management applied.


    A more conservative method for a forex trader to identify the set up of a trend breakout is to wait for a retest on the support or resistance zone after a breakout must have occured. This way, the trader is much more certain to avoid a fake out in the market and would not risk money unnecessarily in the market. The type of the formation of candlesticks on the zone where the presumed breakout occured will also determine if it is worth trading or not. While it is a safe method to identify and trade a breakout, it is not always certain that a retest would occur as sometimes the market just breaks out of a range bound market and never looks back, at least not immediately.

    Screenshot_20201122_003630.jpg

    This chart shows how the market reacted to a breakout in past times.

    Though trading on financial markets entails high risk, still it can generate extra income on condition that you apply the right approach. By choosing a reliable broker such as InstaForex you get access to the international financial markets and open your way towards financial independence. You can sign up here.


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    Quote Originally Posted by Damkidah     
    HOW TO IDENTIFY A TREND BREAKOUT

    One of the profitable trading method in the forex market is to identify and trade a trend breakout. A trend breakout could occur as a continuation of a previous trend and it could also show up as a start of a new trend, whichever way it comes, it can be quite profitable to trade.


    One thing that a trader must first understand as with trading a breakout is that it is only possible after a period of consolidation in the forex market, something that is much more related to a range bound trend. A breakout means a kind of freedom from a certain space, but this time around reference is made to the movement of prices in the forex market. A breakout occurs because price has tested a certain support and resistance zone or channel over a period of time and has eventually found strength to move beyond that zone. A breakout usually signals the beginning of another strong trend which could come as an uptrend or downtrend.


    Technical analysts are those who really trade breakouts that occur in the forex market the most since they are the ones plotting important zones on the market chart. When neither buyers nor sellers have absolute control of the market, the market will usually move to a point where it consolidates and continues to test the same high and low for the time being until either the sellers or buyers take control of the market.


    One way to identify a trend breakout is to make sure to correctly draw out the support and resistance zone during a period of consolidation. As soon as this is completed, traders should pay attention to candles that forms on the these zones (support and resistance) as well their close. If a candle closes significantly outside of a zone, it could be an indication of a breakout and the start of a new trend. Entry could be placed here with proper risk management applied.


    A more conservative method for a forex trader to identify the set up of a trend breakout is to wait for a retest on the support or resistance zone after a breakout must have occured. This way, the trader is much more certain to avoid a fake out in the market and would not risk money unnecessarily in the market. The type of the formation of candlesticks on the zone where the presumed breakout occured will also determine if it is worth trading or not. While it is a safe method to identify and trade a breakout, it is not always certain that a retest would occur as sometimes the market just breaks out of a range bound market and never looks back, at least not immediately.

    Attachment 301237

    This chart shows how the market reacted to a breakout in past times.

    How can I predict "Trend breakout"?

    One of the most popular and profitable trading strategies among forex traders is a breakout. It is said to be profitable because this breakout allows traders to earn hundreds of pips at the time the breakout occurs. Conversely, traders who cannot anticipate a breakout will definitely bite their fingers when the price moves in an unexpected direction.

    A breakout occurs when a certain price level is exceeded by a price movement. The price levels in question can be in the form of support and resistance, pivot points, Fibonacci, and so on. The purpose of trading with a breakout strategy is to enter the market when the breakout starts and continue to follow the trend that was started by the breakout, until a new reversal is formed.

    Breakout Confirmation Terms

    There are three simple conditions for predicting a trend breakout, namely:

    1. Determine the key support and resistance price levels that are really strong and have been tested. For a breakout to occur, Price must break this level.

    2. Ensure that the closing price of the candle is above a key resistance level or below a key support level. The further away from the key level the more valid it will be. For example, for an uptrend, if the closing price of the breakout bar is below the key resistance level, the bullish momentum is very weak. In my opinion, to detect a breakout it's easiest to use the bollinger band where the upper and lower bands are the key resistance and support levels. Can also be combined with oscillator indicators such as CCI or RSI or others.

    3. To be truly valid, wait a few more bars to make sure the price is really at the new level area. At least we need 3 new candles for the waiting time. If these conditions have been met, we can conclude that the breakout condition is indeed valid.

    In trading, it is not uncommon for us to encounter a false breakout. And we must be careful to observe it so as not to misanalyze. So to trade using a breakout strategy, you must always be aware of false breakouts. The way to avoid it is quite simple, namely we have to avoid entry shortly after the price breakout, it's better to wait for confirmation of the price movement chart to confirm the strength of the breakout.

    Almost all traders are fooled by this False Breakout because price or market movements look very strong or even very weak. This condition makes traders think of entering directly into the momentum. need
    We also know that knowing the types of false breakouts may not be fooled again.

    Though trading on financial markets entails high risk, still it can generate extra income on condition that you apply the right approach. By choosing a reliable broker such as InstaForex you get access to the international financial markets and open your way towards financial independence. You can sign up here.


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    HOW TO IDENTIFY A TREND BREAKOUT


    The use of fibo often has to pay attention to the points of support and resistance levels. Because if we can find these support and resistance levels, it will definitely make it easier for us to use this fibo indicator. In addition, this indicator can also be used by paying attention to the current trend, such as a bullish trend, so we can use this fibo to look for buying opportunities, and vice versa.
    professional traders because using this technique can see that this trend is strong going down or it is strong going up, this fibo technique has also determined the support or resistance in the middle, so the use of the Fibonacci technique so the use of this Fibonacci technique has a big effect on users who already understand and already developing this Fibonacci science, you will definitely get perfect and consistent profits using only the Fibonacci technique at what level is uncle? or if I may know about the entry rules, how about uncle? I also want to be able to use fibo, yesterday I used privot where the system is also the same as the level level as well as fibo right uncle, please also give me the demo video for trading use, uncle, so it's easy to understand and understand for the entry, what is that We just need to wait at level 50 and 100, uncle, how about it only bounces at level 61, uncle.
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    Though trading on financial markets entails high risk, still it can generate extra income on condition that you apply the right approach. By choosing a reliable broker such as InstaForex you get access to the international financial markets and open your way towards financial independence. You can sign up here.


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    Trend breakout
    A breakout is a significant change in price direction. The classic definition of a breakout is price penetrating a support/resistance line (including triangles, flags, and pennants), but breakout can be defined in fancier ways, such as breaking a Bollinger Band, ATR band or linear regression channel, or by special barslike the engulfing bullish candlestick and key reversal bar. A breakout is usually a big one-time move in the opposite direction of the existing trend, although sometimes a breakout sneaks up on the critical level and slides over it instead of breaking it with any violence. Just about every trader watches for breakouts with an eagle eye, even long-term position traders. As a rule, the earlier you jump on a breakout trade, the bigger the gain.

    The problem is that many breakouts in Forex are false – they fizzle out and the price resumes in the pre-breakout direction. This is not hard to understand. The breakout occurs in the first place because of a change in sentiment toward the currency. Please see the example chart below. The breakout is characterized by a very tall candlestick that breaks upside resistance, and is followed by a few more mostly higher highs. However, the new sentiment lacks staying power, and after an upward correction (which reaches a little more than 61.8% of the previous downmove, by the way), the currency reverses. When the price penetrates the breakout point on the downside, you know the breakout has failed. The price goes on to a lower low. Traders had a change of heart about the newly positive sentiment that triggered the upside breakout

    fig-56-1-failed-breakout.png
    USD/CHF breaks through resistance (1), fails to establish a trend (2), proceeds to a new lower low (3)
    Note that sentiment changes often. A few months later, after the new lowest low, they got that positive sentiment back and staged another upside breakout. You can see it on the next chart. So far, the second breakout has not failed. It is a curiosity that the resistance lines appear to be parallel. This is a frequent occurrence and probably reflects that each currency has its own momentum habits. This particular currency pair is USD/CHF. Support and resistance lines in another currency pair, say USD/CAD, have a different slope
    fig-56-2-second-breakout.png
    he first breakout (1) compared to the second one (2)

    Breakouts are often caused by an important piece of news or an event that changes sentiment, like a central bank interest rate hike when no change was expected. The next chart depicts NZD/USD in June 2014. The consensus of analysts was “no rate hike,” and yet for five days before the central bank policy meeting, traders were buying the NZD. We can consider it a “just in case” positioning. The NZD closed above the resistance line on the first day. It also put in a very big gain on the day of the announcement itself. This was a classic battle between analysts and traders. Traders wanted to be positioned long in case the Reserve Bank surprised with a rate hike, and this time it paid off. It should go without saying that trading against the consensus does not always work out, and indeed, this move is not completed yet. As of the data on this chart, we still do not know whether the NZD will continue upward. The breakout looks impressive, retracing about 75% of the previous downmove, but it may yet fizzle out. Active traders do not care — as the last bar shows, those who bet on the rate hike are taking profit, stalling the upmove for the moment
    fig-56-3-event-breakout.png
    NZD/USD shows a successful breakout due to the interest rate hike (marked with the green arrow).

    Sometimes a breakout takes place in the absence of any news or detectable change in sentiment. Clearly, some player or group of players had a change of sentiment, but we may not find out what it was until long afterwards. Or some players were trying to drive the price to a level so they could buy more cheaply or sell more dearly. When you are trying to reconcile fundamentals with a breakout on the chart and cannot find reasons, you have to decide whether to obey what you know about the fundamentals or to have faith in the chart. This is a personal decision, but most traders choose to trade the breakout and plan to get out fast in case it fizzles. If you wait until a breakout is confirmed, you will have an opportunity loss since a large portion of the gain comes early in the breakout move.

    Confirming a breakout can be tricky. Some analysts consider a breakout valid if the move is some minimum percentage change, like 20%. We find such a rule to be not useful. A breakout can be valid at 10% or invalid at 40%. One rule is to consider the breakout not false if a previous high or low is matched-and-surpassed. The USD/CAD chart below shows an upside break of the red resistance line, but then the price fails to make a higher close (topmost gold line). It makes highs higher than the breakout bar’s close, but it does not close higher. This is usually a sign of a failed upside breakout, but in practice you cannot be sure until it makes a lower low after the breakout next lower gold line A bigger test of failure is if it makes a low lower than from before the breakout bottommost gold line
    fig-56-4-breakout-fizzles.png
    USD/CAD daily chart with a new higher high but failed higher close

    If you are new to technical analysis, breakouts are about to become the bane of your existence because they can be so confusing. Breakouts seem to be fizzling when all that is happening is a large group taking early profit — and then the move resumes. Breakouts go hand-in-hand with pullbacks, and so you need to get a clear idea of both concepts


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    How can I predict "Trend breakout"?
    In the forex market, there are several types of market breakouts and its prediction can be different, but one things the breakouts have in common is that breakouts can only occur at a support level or at a resistance level. before we move further, let's list the types of breakouts in the forex market
    • The trend line breakouts
    • The channel line breakouts
    • Typical support and resistance breakouts

    • what is forex breakouts?
    A breakout in the forex market is the situation where the price moves outside the defined support and resistance level drawn on the chart. in the forex and stock market, traders open sell trades when the price breakout past the support level, and conversely traders buy when the price breaks the resistance level.
    breakout trading is unlike any other typical style of trading we can forecast the direction o price with the aid of an indicator, breakouts require a lot of patience, you can just trade breakouts before it happens, that Is suicidal, you will have to wait for a breakout to occur before actually opening a trade.

    • let's use the then trendline breakout as an example

    By looking at the above chart you could see the price been respecting the support several times, so it's not guaranteed that the price will not still act the same way if you are to trade breakout before it happens, so you have to wait for the breakout to happen before entry. on the chart, you see the price breaks the support level.

    But to avoid fake breakouts in the market, I always enter a trade when the price retest the support or resistance level like the below chart
    please go thought this 9-minute video to learn one or two things more about breakouts

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