A breakout is considered to have taken place when a price moves out of consoldation or past a previous reversal point. We look for breakouts to try and deterine when a price is going to make a move or trend. It is then the best time to open a new position.  Here is an example of the break breaking out of Consolidation .   In this case the price moved out of the yellow area and had a strong move to the negative.  The hardest part is recognizing the consolidation areas.

          Another form of breakout is when a price breaks throu a temporary price ceiling.   Note the following graph.

Of interest is candle #1.   It is called a Fractal because the two immediate candles to the left have highs that are lower than candle #1 and the two immediate candles to the right also have highs that are lower than #1.   It represents a temporary high and then a pull back from that high.   If the price continues higher at some point in the future it will have some meaning.

Because of this we draw a line at that high and watch the candles over the next few days.   In this case the prices did resume higher.   Candle #2 actually broke above the blue line but then pulled back.  We are looking for the next candle to open above the blue line price.   Candle #3 was close to opening above the blue line but it did not.

Candle #4 did open above the blue line and the prices took off.   This is a breakout above a temporary resistance point.   The exact same logic can be put in reverse for prices going down.

Breakouts like the ones show here are sometimes difficult to spot for the novice trader.  Even when you know what you are looking for it takes 45 min to an hour each day to look through all the pairs.  Subscribe to the Breakout report and they will be delivered to you twice a day. 

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