Step 1 is to identify the trend direction and the range that your price is trading in. That way you can know when the market is moving up, down, or sideways. By recognizing a change in direction, you can make sure that your trades align with what the market is telling you.
Step 2 is to identifying a potential breakout area is based on previous market structure and is similar to identifying a potential support or resistance level. However, it’s important to remember that there are a lot of possible breakout areas, so the best way to identify an ideal candidate is to go back and look at the previous two highs or lows and determine whether they were created after a failed double bottom or double top formation.
Step 3 is to find the breakout move potential With a breakout chart pattern, we can measure the distance between the high and low of the pattern and use this as a guide to make predictions about which way the trend will break. This helps us to avoid being wrong and being caught by surprise.
Step 4 we know where the market will go next. So we wait for the breakout to happen and then put in our orders. That way we don't get greedy and end up with our orders filled at less than the true target price.
Step 5: If you wish to use a stop loss, you need to determine a reasonable amount that you are willing to lose before the pattern becomes invalid. To give this form enough room to breathe, it is ideal to have a stop loss at either
50% of the triple bottom patterns move; or
The lows of the triple bottom pattern
Step 6 is to place the take profit level You should have the take profit level at the expected move as found in Step 2. This is the expected move.
The Result: After using the best execution method: We dodged a potential failure.
After the price entered the market, the momentum seemed to take over and it kept going higher. Then, at a certain point, it stopped. At that time, we took profits and the momentum reversed.
As we can see in the above example, the market movement followed our predictions almost exactly.