Have you ever felt are thousands of pips above the long positions are still open, or thousands of pips below the short positions are still open? That is what you will experience if trading following the direction of the trend (trend following). Maybe you will not get bored watching the price movements for days, weeks or even months, because you're in a state of profit. But, how can I make such could happen? Breakout, or breach a certain price level. As easy as that why? Yes, as long as price movements are trending and meet 3 requirements that usually occurs in the condition of the breakout. For example, the following are the key levels the pair GBP / USD for the break:
Why there should be a condition? Is not if the price has gone through the key level could be considered a breakout? Yes, there needs to be a requirement to confirm the validity of the breakout happens because many traders are stuck because it only focuses on the break at the beginning (initial break) only. Traders consider the price as long as it can penetrate the key support or resistance level then the breakout, and with their entry immediately sell or buy. But in reality the market does not always respond the way they think. Often times the price reverses to move back due to profit taking by large traders claimed they were too impatient or hurried entry.
Three requirements for confirmation of a breakout is simple
1 Determine levels key support and resistance price. The key level of support or resistance point is really strong and has been tested. Price needs to break that level.
2 Make sure that the closing price of its candlestick bar (bar breakout) above the key resistance level or below a key support level. Increasing distance from the valid key level. For example, for an uptrend, if the closing price of the breakout bar below the key resistance level then the bullish momentum is very weak and tends to occur as a result of profit-taking reversal movement those who have entry buy in advance, as was the case in the pair USD / CHF below. A bar breakout is not confirmed that the condition is not valid breakout. Price moves back downtrend (reversal).
3 Wait a few bars again to make sure the price was actually at the level of the new area (after the breakout). For the daily time frame is usually a waiting time is 3 days (or 3 bars). If during that period the price has moved in the new area level then we can conclude that the condition is indeed a valid breakout. If you use a time frame lower than daily, then estimate the number of bars for confirmation, which is clearly more than 3 bars, and the smaller the time frame you are trading more and more bars to confirm.
Here's an example of its application on the GBP / USD daily (see also GBP / USD weekly above
At A we created checklist to confirm the breakout:
1 The break key resistance - true. 1.6747 key resistance (high level of 2011) has been penetrated.
2 Closing price breakout bar above a key resistance level 1.6747 - not. Instead the price closed below the key resistance so that the momentum of the breakout (bullish) is very weak and prone to movement reversal.
3 3 days later (the next 3 bars) are in the area above the resistance level - yet.
Conclusion: The breakout condition is not confirmed so invalid.
Back to the drawing GBP / USD weekly above, if the high level of 2011 (1.6747) is really a break, then the first target is the high level of 2009 (1.7401) around 290 pips, and the next target is the high level of corrective 2008 (1.8668), or about 1,600 pip if our entry at 1.7401 level breakout condition.
Those bout Three Term For Breackout Confirmation wish you get more of bennefit
Support by <a href="http://www.hypersmash.com/dreamhost/" id="bq606">Check This Out</a>
Support by <a href="http://www.hypersmash.com/dreamhost/" id="bq606">Check This Out</a>
