$BTC

Stock Price Behavior Analysis Course

Lesson Fourteen: Techniques and Volume Analysis for Breaking Through Consolidation Areas

In the last lesson, we discussed operations in consolidation areas. Today, we will learn how to determine a breakout from a consolidation area, along with volume analysis to enhance the accuracy of breakout judgments.

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1. Signals for Breaking Through Consolidation Areas

• The price's real body breaks through support or resistance lines, and the closing price stabilizes outside the range.

• Breakouts are usually accompanied by longer candlestick bodies, indicating strong momentum.

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2. The Role of Volume

• Increased Volume: A significant amount of trading occurs during a breakout, indicating that both sides of the market have reached a consensus, making the breakout highly credible.

• No Increase or Decrease in Volume: A breakout may be a false breakout and should be approached with caution.

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3. Confirmation through Pullback after Breakout

• After a price breakout, it often retests the recently broken support or resistance line (now functioning as support or resistance).

• If the pullback does not break below and is accompanied by reduced volume, the breakout is valid, and consideration can be given to following the trend.

• If the pullback breaks below, the breakout fails, and strategies must be adjusted promptly.

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Breaking through consolidation areas often marks the beginning of significant market movements. By combining volume and pullback judgments, one can effectively increase the win rate.