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| Breakouts and breakdowns tend to occur in waves. Very frequently, each surge prints at a similar angle, duration and extent as the one that precedes it. This helps you predict when the break will occur and how many points that price will move before the wave completes. Bars will often stop and congest between each trend thrust. This is where you need to get busy. Look at the prior moves and locate any trendlines or channels. Count the number of bars within the prior congestion zones. Locate the price level where a violation is likely to trigger the next surge. Look at the ranges of the last few bars or candles. Are they narrowing or expanding? Start to plan your trade now. What will you do if the stock gaps up or down through the breakout price on the next bar? |
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