Lesson 4 of 7
Breakout trades have one thing in common – all the successful ones are supported by volume = demand in either buying or selling the breakout
To spot the demand – Look for volume increase.
This type of confirmation can be used in:
– Patterns trading
– Range trading
– MS breakouts
– Key levels.
Once assets break out of its fair value, you need to see the price accepting these prices. There must be demand in trading – there must be volume transacting.
If price is breaking on a low volume, this means people are not accepting the new price – not willing to trade it – asset is likely to get back into its fair value. Think about markets as a simple auctioning process.