Watch Post-Breakout Behaviour – 2

 

This is what I like to see in a breakout…

<image: Watch Post-Breakout Behaviour>

<image: Watch Post-Breakout Behaviour> 

This is a prime target for a breakout failure.

But I don't ever just jump in and fade the break.

There is never any certainty in this game. It may well rally.

Instead, I watch post-breakout behaviour and CONFIRM that there are no signs of strength.

<image: Watch Post-Breakout Behaviour> 

<image: Watch Post-Breakout Behaviour>

<image: Watch Post-Breakout Behaviour>

<image: Watch Post-Breakout Behaviour>

<image: Watch Post-Breakout Behaviour> 

Don't ever just jump in and fade the break.

There is never any certainty in this game. It may well rally.

Instead, watch post-breakout behaviour and CONFIRM that there are no signs of strength.

Happy trading, 

Lance Beggs

 


 

Written by

YourTradingCoach - Admin

3 Comments to “Watch Post-Breakout Behaviour – 2”

  1. Nick says:

    Hi Lance,

    Great explanations!
    One quick question – in the last picture, the first target is for “reversion to the mean” – what exactly is the mean? How do you define it?

    I have heard some traders use 10/20 moving averages as the mean but clearly you do not have any moving averages?

    Thank you

    • Lance Beggs says:

      Hi Nick,

      The target is actually slightly below the reversion to the mean. Visually draw a “line of best fit” through the centre of the prior swing. That’s a reversion to the mean. You can use an MA if you prefer. There are no problems with that.

      I’m looking for where reversion to the mean is and then adjusting slightly for PA. This one, for example, looks to be adjusted to the point of initiation of the last rally.

      The general concept though, is to NOT treat every counter-trend trade as if it will become a full reversal. I take some off on the reversion to the mean (or general area). The remainder of the trade will then be reconsidered. Adjust targets if necessary, or trail a stop if there is a chance of reversal.

      Lance.

  2. Nick says:

    Got it, thank you Lance!

    Mean = roughly at centre of the prior swing and adjusted for the price action within that swing.

    Appreciate your reply!

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