Setup on a Break-out
When the prices break a resistance, and there’s strength before, it means the smart money is expecting higher prices, and so should we as well. In this setup we aim to understand if it’s a valid break-out, and if it is, we should enter the market just after the prices break the resistance/support.
1. Strong background
2. Major Demand/Demand signals before the break OR wide red (high volume) up bars with the close near the bar’s high
3. The volume on the break-out bar should be above average. Enter right in the break of the resistance or in a dip after the break-out (it won’t always happen though).
Stop-loss: Set the stop-loss at the red dot.
Take-profit: Set the take-profit at the green dot.
Move stop-loss: When price reaches the blue dot (the indicator will automatically alert you), the stop-loss should be moved to break-even to protect profits
Note: Many times the price will already be in an uptrend before the break-out for some time. While it may seem counter-intuitive to go long after such a rally, after a successful break-out prices will usually rally much further, as long as the previous uptrend is not too steep.