I see a lot of charts mentioning "buy after the break out" but nobody tells you when to buy and how to avoid buying and seeing the price going back in the previous pattern and cancelling your break out.
Many traders call it a "fake break out" but imho its not fake. Such peaks are telling you something and may even lead to repainting your pattern......
- First of all, I am on a bigger timeframe looking for patterns. Normally 240m or 60m, the chart above is only for showing some examples.
- When I detect a pattern I already have a good feeling which direction it should break out, so i start looking at my indicators ( , , ) if they confirm my ideas.
- Counting the legs (1-5, or ), I know where to expect the breakout
- Once the breakout occurs, the real action starts and its getting tricky! I switch to a lower timeframe...60-15 minutes.
- You can buy AT breakout of AFTER breakout. Usually I buy after breakout when I see a Trend Contination Pattern.
- Byuing at breakout is risky as it may result in a fall back in the previous pattern (mentioned as "no follow up" in the chart)
- I wait till I see some sort of consolidation and mostly a retest of the previous . For example: when we have a breakout to the upside, I look for a TCP , mostly a bullflag.
- After detecting a TCP , I wait for a strong, fat candle in the desired direction what is a sign for me to enter the trade.
I only enter a trade AT breakout when its a really strong impulse, which is still very tricky. Don't just enter a trade when the candle move out of the pattern. It should be a strong move.
With this strategy, you avoid buying a break out what appears to be none. You enter the trade at a later stage, but your risk is way lower!
Better safe than sorry.
**Trade what you see, not what you think**
If you like my idea, pls give a thumbs up.
Questions or you don't agree? Write a reaction and we can discuss ;-)
In the end, that like system is not really a thing for me. I admit that I also often forget to like a good setup haha