Breakout, Pullback, Continuation Pattern

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Breakout, Pullback, Continuation Pattern

Postby Azim166 » Sun Dec 05, 2010 1:40 am

Hello Everyone!
I would like to share an effective way of trading. It is simple and very profitable with excellent risk reward ratio. It is trading using Trendlines & Chart patterns. I focuses on QUALITY trades, NOT QUANTITY. Less trades but quality trades is the best way of trading.

1st: You need to identify channel.
2nd: Look for a breakout.
3rd: Look for a pullback testing the trendline.
4th: Enter the trade after the pullback, and put the stop loss 5 pips behind the pullback.
5th: Profit target – Calculate the size of the channel

Example for BUY:
ajim.gif


Example for SELL:
ajim 1.gif
Azim166
 
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Re: Breakout, Pullback, Continuation Pattern

Postby Azim166 » Mon Dec 06, 2010 5:45 am

Rom wrote:Could have worked on Gold 1st December

Gold.png


Cool!
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Re: Breakout, Pullback, Continuation Pattern

Postby Azim166 » Tue Dec 07, 2010 11:47 am

Rom wrote:
GBPUSD1.png


GBPUSD2.png


Thanks for posting Rom :D
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Re: Breakout, Pullback, Continuation Pattern

Postby Azim166 » Tue Dec 07, 2010 12:28 pm

GBP/JPY - 1 hour chart
Attachments
azim.gif
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Re: Breakout, Pullback, Continuation Pattern

Postby jack mason » Sat Dec 11, 2010 5:40 am

Rom wrote:Randomness or not? What do our professionals say?

Well I'm not a professional, but even I know that you can't rely on, or place any type of serious dependency on technical levels around this time of the year.

According to the guys over on here combination-strategies-t140.html & I've read the same elsewhere, the liquidity & volumes from the large players dries up considerably from around Thanksgiving weekend right through to the middle of January when institutional desks are back in full swing.

The very light trading volumes will adversely impact the volatility on some of the more actively traded instruments, thus causing erratic & exaggerated price movements.
They have advised being very selective with levels, set ups & triggers & preferably utilizing lower than normal trade sizing if you're intent on trading inside these choppy & potentially erratic conditions.

I'm not sure where you're plucking those support & resistance lines from, or what relevance they hold as you haven't offered any back up information or prior reference, but it has been drummed into me to seek out & focus on the levels & zones more commonly referenced by the larger fund players & look to set up my potential reaction points on & around those zones.

Since adopting that particular outlook my success rates trading these types of technical scenarios have improved noticeably.
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Re: Breakout, Pullback, Continuation Pattern

Postby jack mason » Sat Dec 11, 2010 8:47 am

Rom wrote:.....but I assumed bullish trend most places, on Gold, Silver, EURUSD, doing copyworks from headlines.

Are you sure about that?
I wouldn't call the current bias on eur/usd bullish at all.
In fact I'd describe the recent price action as quite obviously "rangey". And I've highlighted that area on your last chart example with a vertical line on my 4 hour chart below to evidence my view.

The last 6 weeks bias is bearish on that timeframe.
The last significant swing high is 1.3445 (circled on the chart). Since that level it's printed lower highs – that doesn't signify a bullish bias in my book.

In order for the eur/usd to attempt to flip back into bullish mode it will need to close back above 1.3445 first, followed by 1.3785.
Image

I think you need to go back to the drawing board & get the basics right first. If you think all you need to do is throw a couple of horizontal lines on a chart & trade around them, you've got a few harsh lessons in front of you.
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Re: Breakout, Pullback, Continuation Pattern

Postby jack mason » Sat Dec 11, 2010 9:04 am

There are only 3 current obviously significant zones on eur/usd according to the way I've been taught to establish & identify reactive support & resistance levels by the pro's here on the Combination Strategies thread.

The chart below is separated off into weekly opening zones.
The upper level (1) is the low of week commencing 15 November.

It was retested during week commencing 29 November & now marks it as the most recent swing high where stop orders will now be congregating on any future visit to that area.

The next level of interest is the 32 round number (2) which marked the low of week commencing 22 November.
That zone has supported the price activity during the whole of last week & is now the central focus for the shorts attempting to push price back to the most recent swing low (3) which was week commencing 29 November's low marker.

Those 3 zones are now the near-term focal points for bullish/bearish activity on this pair & can be traded back & forth dependant upon the intraday bias of the speculative interest.
Image
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Re: Breakout, Pullback, Continuation Pattern

Postby jack mason » Sat Dec 11, 2010 12:45 pm

Rom wrote:Of course, when arrow is up it means a long trade.
When I feel bullish I skip downside breakouts.

The fact you choose to take a bullish stance on that pair doesn't alter the fact that technically on that timeframe, the current bias is quite clearly bearish/neutral.

You stated 4 posts back that (& I quote you) in your assumption the trend on your 4-hour chart was bullish:
Rom wrote:I assumed bullish trend most places, on Gold, Silver, EURUSD...

I strongly disagreed with you & pointed out why.

If you don't wish to accept someone else's view on something, then don't mention it in the first place.
It will save an awful lot of trouble & wasted effort.

I for one don't appreciate wasting my time debating the finer points of trend identification with someone who is clearly unable to tell one technical direction from another in relation to a very specific timeframe.

I don't doubt the core strategy has merit & as with any other technical style, folks will trade it differently according to their own criteria.
The way you choose to trade it wouldn't even make it onto my minimum requirement list, but then it doesn't really matter what I think – after all, different views & stances is what makes a market.

On a sidenote:
I'm beginning to understand why the guys on the Combination Strategies thread no longer wish to enter into any further dialogue or commentary with you on this forum.

Your general attitude & manner is very stubborn & argumentative.
It's quite obvious from your posts that you're a novice to this environment & your understanding of even the basic technical structures is poor at best. Yet you continue to argue & remonstrate with experienced professionals, regardless of the fact you haven't got a clue what you're talking about.

I'm adding myself to the list of those who no longer wish to engage with you on this board.
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Re: Breakout, Pullback, Continuation Pattern

Postby Azim166 » Sun Dec 12, 2010 3:23 am

Hello Rom,

I've read and look at the your post. Thanks for posting few examples on how you trade.

I can see that you just simply draw Support & Resistance and you look for a pullback. I would say it's quite effective to trade that way. But if you want the odds to be on your favor, just trade on a breakouts of a channel. As you know the price has 2 different stages, Trending and Ranging.

Breakouts always happen on ranging market. When there is a range market, there will be a breakout. Often when breakout occur, you can see an obvious pullback. The reason we enter on the pullback because that is a confirmation it will not be a false breakout.
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Re: Breakout, Pullback, Continuation Pattern

Postby Azim166 » Sun Dec 12, 2010 7:15 am

Rom wrote:Hi Azim166

Why does the "Breakout, Pullback, Continuation" entry strategy work?

When resistance is broken, the same resistance line tends to be a strong support line, meaning next bottom "will be" at this resistance line

(Compare that with fib levels. Fib levels do not tell us at what fib level price will bottom, we have to do guesswork)

Because of this market behavior we can make an entry when price approaches and rebounds from this resistance/support line first time, or we can use a limit order for exact entry at this resistance/support line.

In both cases we can use a small stoploss, meaning a low risk entry.

"line" = may also be a zone


I Agree with you :)
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