$BTC

Breakout Strategy After Consolidation (Build-up Breakout)

Explanation of a potential setup for a trade based on a technical pattern known as “breakout after consolidation.” The basic idea is to identify a period of limited price fluctuation before a strong price movement occurs.

Detailed explanation:

1️⃣. Resistance Zone:

◦This is the level at which the price struggles to rise above. On the chart, it appears as a horizontal blue line.

2️⃣. Build-Up:

◦This is a period of trading within a narrow and limited range, shown in the image inside the purple box.

◦During this phase, the price moves sideways just below the resistance zone.

◦The existence of this phase not only highlights the importance of the resistance level but also helps traders identify a suitable point to place a stop loss order, which is usually just below the consolidation area.

3️⃣. Breakout:

◦This occurs when the price successfully breaks through the resistance zone strongly after the consolidation phase ends.

◦On the chart, the breakout is represented by the long green candle that closed above the resistance line.

4️⃣. Possible Entry:

◦This is the point where a trader can enter a buy position.

◦This point is usually right after the breakout confirmation, meaning when the candle closes above the resistance level.

Summary 🔻

This strategy relies on monitoring the price as it “prepares” to break through an important level, giving the trader an opportunity to enter a trade with a clear risk level (stop loss).

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