In the case of going long on an upside breakout, a stop loss is typically placed just below the resistance level. In the case of going short on a downside breakout, a stop loss is typically placed just above the support level that has been breached. The chart shows a large increase in volume, associated with an earnings release, as the price breaks through the resistance area of a triangle chart pattern.
The breakout was so strong that it caused a price gap. The price continued to move higher and didn't retrace to the original breakout point. That is a sign of a very strong breakout. If entering long, a stop loss would be placed just below the resistance level of the triangle or even below triangle support. Because the price had a large gaping breakout, this stop loss location may not be ideal. After the price continued to move higher following the breakout the stop loss could be trailed up in order to reduce risk or lock in a profit.
A week high or low is simply the highest or lowest price seen over the last year. A breakout is a move above or below resistance. There are two main problems with utilizing breakouts. The main problem is failed breakouts. The price will often move just beyond resistance or support, luring in breakout traders.
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The price then reverses and doesn't continue moving in the breakout direction. This can happen multiple times before a real breakout occurs. Support and resistance levels are also subjective. Not everyone cares about the same support and resistance levels. This is why watching volume helps. An increase in volume on the breakout shows that the level is important. Lack of volume shows the level is not important or that the big traders who create big volume aren't ready to participate yet. Technical Analysis Basic Education.
Bitcoin Cash Daily Chart
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What Is a Breakout? Key Takeaways A breakout is when the price moves above a resistance level or moves below a support level.
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Breakouts can be subjective since not all traders will recognize or use the same support and resistance levels. Breakouts provide possible trading opportunities. A breakout to the upside signals traders to possible get long or cover short positions. A breakout to the downside signals traders to possibly get short or to sell long positions. Breakouts with relatively high volume show conviction and interest, and therefore the price is more likely to continue moving in the breakout direction.
Only a sudden decline would indicate a deeper correction first. But for the moment, a bullish breakout is likely. The main question is how price action will respond to the previous top? Will it break and continue or will the wave 4 expand? The analysis has been done with the ecs.
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The 4-hour SuperTrend indicator recently sent a signal to short Stellar, casting a bearish cloud.
The BTC Breakout Continues as New Bitcoin ETF Launches
Soros has over time invested in digital asset infrastructure, hinting at Bitcoin ownership. Chiliz is drawing closer to breaking out of a descending parallel channel. Price action past the 50 SMA and SMA on the four-hour chart will add credibility to the potentially massive upswing.