Breakouts as Signals of Supply and Demand Adjustment
The entire nature of trends is changing constantly, even as the trend moves consistently. When the trend is moving sideways for an extended period of time, analysis and forecasting are more difficult because there is no dynamic trend to reverse. However, when trends are rising or falling, a key indicator is a breakout. By definition, resistance and support are supposed to prevent breakout from succeeding, confirming that the current breadth of trading is holding. If a breakout does succeed, it means something has changed.
When breakout succeeds in the direction of the existing trend, it not only confirms the trend but it accelerates it. In an uptrend, successful breakout above resistance means ...
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