Three Ways To Identify Breakthroughs 2018!

Breakthroughs are some of the most difficult environments for traders, and this is understandable; they represent what is possible, but often fail.

I have already written an article on Forex Master Levels trading penetrations after the breach, but what about the moments before the breakthrough where you have to make this important decision trading or not?

Forex Master Levels
Forex Master Levels

How can you identify them, and what are the key elements that precede strong breakthroughs?

This is the fundamental theme of this article that offers you 3 tips for determining the penetration that quickly becomes so powerful that you do not fall into the trap of a false break.

I will touch on the three elements that you will have to find before thinking about penetration, and then I will quickly highlight beyond them from a command flow perspective. By learning to discover these guides, you can set yourself up to trade out potentially profitable breakthroughs and get a bigger share of the next traffic.

1) Support level or resistance is clearly defined

The first condition to determine the correct situation before a breakout is to have a clearly defined barrier in the form of a support or resistance level, and the usual situation is when you have an existing trend (let’s say a bullish trend), and then the price action is resisting at the key level.

It is best to have at least two students at this level before deciding. The higher this level, the better, but it should be noted that this is only a condition, and in general it is not enough to define the proper penetration model. The goal of the two interlocutors is to identify the point of contention where traders gather and what level they are defending (to the extent that bulls in this case) are unable to penetrate it.

By finding both existing parties, we have the environmental potential from a command flow perspective to create a proper breakthrough. In this example, the seller group clearly maintains the price you want to keep, and puts stop loss above it directly. By keeping their defense in a clear place, this tells us where their orders and stop-loss orders are likely to be. They limit the stops, in addition to bringing in new buyers and this is the goal of the bull community.

The following is an example of the clearly defined resistance after the bearish trend and the oscillation period, which shows that there is a bears clearly defending the level.

2) Pre-penetration pressure

The second element that you want to be present before the breakout is the pre-breach pressure that appears as a compression of the price action. This tension before penetration is very important because it creates friction and pressure on the defenders (the bear community in this case). As the bears realize that their rejection and resistance at the main level is gradually diminishing, while the bulls continue to gain more upside and progress, To strain their minds, forcing them to make a crucial decision (either to keep the deal and defend the profits, or get out of the market).

The more the market gets narrower for them, the bulls are pushing the bears to get out of the market, and the group of sellers who defend the level will often come out early, leaving the defense to those who do not realize the game is over. This weakens the defenses further at these levels, leaving very few traders to bear the burden.

You can easily identify the price action and this pressure prior to the break, by forming the price action of the rising lows while attacking the resistance level, or for the downside when attacking the support level. This combination of the current Bulls is ready to buy the instrument at the worst price on the market, as well as the New Bulls group who want to open pre-break positions, and the best example in the same chart that I’ll be making clearer.

3) Load the 20-day exponential moving average

Another key element you will find before the breakout is that the 20 day SMA starts to carry the price leading to resistance or major support being defended. This is not so much that traders place orders there before the breakout (although much will), but it is also a visual representation of how the pressure occurs.

Once we look at the chart above, we can see at first, after the first rejection of the main resistance level, the price broke well until the bottom of the 20 day SMA. But the closer we get to the right hand side where pressure occurs, you see the Secret Profit Matrix market barely moving below it for more than one candle before appearing on the roof again.

You will also notice how, in the first few times, rejection is approaching the 20 day exponential moving average, and then after one candle the price crosses the level. But at the end many candles begin to float above him as some traders enter in anticipation of a breakout.

Another really wonderful example you’ve been writing about in the blog some time ago about the AUDUSD versus the US dollar on the 1 hour frame. The currency pair was on a 110-day rally in two days, but faced the key resistance level at 1.0081 (see image below).

Using the example above, note how the 20-day exponential moving average was breached for about 20 pips in the middle of the chart, but then as we got closer and closer to the resistance level, the pressure started to occur. Note how the 20-Day SMA started Price, and breakthroughs began to diminish gradually?

This is a combination of very few sellers who defend the level, while the bulls anticipate the breakout (and realize that they are in control) and are likely to enter into new deals to anticipate the next break (I was one of those traders). In the end, the pre-penetration pressure became very intense. The bear group surrendered when the bulls pressed, doing stop-loss orders and creating a large break-in candlestick with a strong closing price.

Finally

Breakthroughs can give you very lucrative opportunities when you can get a good position for yourself. But in order to do this, you must be able to identify the very potential breakthroughs with these three basic elements:

1) The level of support / resistance is clearly defined

2) Pre-penetration pressure

3) Load the 20-day exponential moving average

If you learn to discover these key elements before the breakout, as well as read the various other price action guides, you will find yourself entering breakthroughs that are very likely to succeed, increasing your success and profitability. You will also find yourself falling into the trap of a false break that could ruin your rapid trend gainer trading account. Trust in trading. It is therefore important to read and identify key elements before penetration.