Trend lines and breakouts

Trend lines and breakouts

In order to trade breakout successfully, you need to remember our previous lessons. Remember all those chart pattern that we talked about a while back? If not, here, you can refresh your memory here.

Besides chart pattern there are several other ways that can help you trade a breakout. And in the course of the next few lessons we are going to be looking at each and every one of the individually, do that not to overload with the information.

The first one is a trend line.

In order to spot a breakout, you need to draw a trend line on the chart. And it just can’t be easier – you just look at the chart and draw a line that goes right along the trend. Remember that when you draw a trend line it would perfect if it would connect at least 2 tops or 2 bottoms together. The more of those you connect, the stronger is the trend line.

So, how does that help us? Well, when the price gets close to a trend line there are two things that could happen:

The price could bounce off and go on with the trend.

The price could go through the trend line and cause a reversal.

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How do you spot a breakout in their situation? Well, you are to use all of those technical indicators that we talked so much about. When there is a trend they are the ones that can help you determine whether breakout is going to happen or not.

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