Range Breakout

Style:                    Momentum
Trade Type:       Trend initiation



Essence:

  • Range:
    • Indication of buying pressure within a range with volatility compression by either:
      • HL into resistance
      • Tightening range near upper edge of larger range
    • Needs to have significant resistance level, tested min. 3 times, will it create emotions in market participants?
    • Optional: Failure test at bottom of the narrowing range
  • Range breakout:
    • Momentum kicking at breakout, gap is very constructive, volatility increases
  • First pullback:
    • Volatility ideally decreases again
    • Violation of support at prior resistance is rather constructive
    • Market presses again towards breakout high

Entry:                  

xxx


Initial SL:            

xxx


Management: 

xxx


Profit target:    

xxx


Thoughts:          

There is always a 2nd chance after successful b/o
Most breakouts fail
Stocks are mean reverting, commodities tend to trend, FX are trending best
Do not load the PF with too many stocks pre-breakout
The more often S/R is tested the more likely it is to fail

Advertisements