Correct breakout
- Closing above the broken point with large volumes: Indicates strength in the upward trend.
- Rising: After the breakout, a rise in price occurs.
- Returning to test the broken point: The price often returns to test the broken point before continuing to rise.
- Stabilization: After returning to test the broken point, the price stabilizes above it.
- Rising again: After stabilization, a rise in price occurs again.
Correct break
- Closing below the broken point with large volumes: Indicates strength in the downward trend.
- Falling: After the breakout, a fall in price occurs.
- Returning to test the broken point: The price often returns to test the broken point before continuing to fall.
- Failure: After returning to test the broken point, the price fails to return above it.
- Falling again: After failure, a fall in price occurs again.
Conditions of the technical pattern.📸⬇️
- Previous upward trend: There must be a previous upward trend before the pattern forms.
- Forming a butterfly pattern: The pattern must be a butterfly and not another harmonic pattern.
- Forming an ABCD pattern: There must be a targeted ABCD pattern that breaks the neck line and retests the neck line.
- Fibonacci ratio: The pattern often corresponds to the 38.2% Fibonacci ratio.
Long shadows in Japanese candles ⬇️
- Long shadows on both sides: Indicate prevailing ambiguity and the price's inability to sustain the recent upward movement.
- Extremely long shadows: Indicate that traders could not maintain the price at this bottom, allowing buyers to dominate the market.
Divergence first positive
- Positive divergence: Depends on the difference in bottoms between the price indicator and momentum indicators such as MACD and RSI.
Secondly, negative divergence.
- Negative divergence: Depends on the difference in peaks between the price indicator and momentum indicators such as MACD and RSI.
First target and achieving the second target.
- Maintaining support: Support at the neck of the pattern must be maintained.
- Not breaking the two bottoms: The important thing is not to break the two bottoms to achieve the second target.
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