1. What is a level breakout?
It is when the price of an asset (like a coin or stock) exceeds a specific level that it struggled to surpass previously (like resistance or support).
- Example: If the price of a coin fluctuates around $10 and fails to break above it, then suddenly rises to $11, this is called a breakout of $10 resistance.
2. Signs indicating a potential breakout:
- Form a "higher low":
When the lowest price of the coin (the bottom) gradually rises, this indicates an upward trend.
- Example:
- First bottom: $8.
- Second bottom: $9.
- Third bottom: $9.5.
Here, each bottom is higher than the previous one, which enhances the chances of an upward movement.
3. Best time to enter the trade:
- After confirming the breakout:
Do not buy or sell just because the price is approaching the level; wait until the price closes above resistance (for buyers) or below support (for sellers) to avoid false breakouts.
4. Important warning:
- "Do not enter near resistance":
If the price is close to a resistance level and has not broken it yet, it may rebound downwards.
- Example:
If resistance is at $10 and the price is at $9.9, entering here may be risky because the price may fail to break out.
5. How do you benefit?
- Buying after the breakout:
If the price breaks above $10 resistance and closes above it, you can buy with a stop-loss below $9.8 (to protect capital).
- Target:
The price may rise to the next level (like $12) if the trend is strong.
Summary:
A level breakout is a strong signal for a trend change, but you must:
- ✅ Wait until the price closes above/below the level.
- ⚠️ Avoid entering before confirming the breakout.
- 📉 Always use stop-loss orders.
