How do you ensure the success of breaking price levels in trading?
If you are a trading enthusiast or a beginner in the world of cryptocurrencies, understanding the movement of breaking price levels is one of the most important skills you should master to achieve success in the market.
Here’s a detailed explanation of the most important factors you should monitor to confirm the success of the price breakout:
Strength of the breakout candle:
When the breakout occurs, the breakout candle should be strong and clear. How do you know that?
Simply look for a candle with a large body and short or no wicks. This type of candle shows strong momentum in the market, indicating that there is strong pressure pushing the price in the new direction.
Trading volume:
If you notice that the trading volume during the breakout has doubled or more compared to the previous volume, this is a strong indicator that the breakout is not just a temporary movement, but is supported by market participants. High volume enhances the credibility of the breakout and increases its likelihood of success.
Continuity of the directional movement:
After the breakout, the directional movement should continue clearly. How do you ensure that?
🔹Watch the candles following the breakout: If the candles are strong and directional, it means that the market supports the new direction. Continuity of movement is key to avoiding falling into the trap of a false breakout.
🔹Market context: If the breakout occurs in a key support or resistance area, this increases the likelihood of the breakout's success.
🔹Multi-timeframe analysis: Confirming the structural breakout on a higher timeframe increases confidence in the success of the breakout.
Retest:
Often, the price returns to test the broken level. This movement is known as "#Retest."
If the retest movement is weak compared to the breakout movement, this enhances the likelihood of the breakout's success. The retest is considered a golden opportunity to enter the trade with greater confidence.
💡 Tip:
✔️Do not rush into trading decisions based solely on the price breakout. Combine these four factors to analyze the market comprehensively and make informed decisions.
✔️Additionally, combining the structural breakout with other analytical tools like Fibonacci or relative strength indicators increases the strength of the signal.
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