The biggest benefit of moving forward step by step is that whatever you are going to learn today and whatever you learned yesterday, it is all going in sequence. So yesterday you understood the price action.
Today we are going to learn about breakout and breakdown. How do they happen? How do we trade them? In fact, yesterday you learned to trade according to support, resistance and trend.
Today we are going to continue exactly that and what we understood yesterday, I will continue it from here. In fact, this is a series going on. We are doing a crash course in which you are starting from fundamental analysis to technical analysis.
Whatever you need to learn, there is a crash course of 21 days. In this, you will be seeing here that which topics are going to be covered. So all the topics are going to be covered and definitely as we said today, we are going to learn breakout and breakdown trading. So let’s start with it without wasting any single second.
I will continue what we understood yesterday. Now you see, we discussed yesterday that where the price got rejection, there are sellers sitting.
We plotted horizontal line yesterday. From there, the price falls. How far does it come? It comes to support. On support, youkan see that a candle is made and a hammer is made. After that, the price tries to bounce back, but still it is not able to break its resistance.
Now, basically if we are buying for us, then you have to understand that the sideways markets a no trade zone for you. When will you trade, now you will wait for the breakout. Now see here we are seeing that candle has given a breakout.
Breakout means breaking the resistance. When you have to understand one thing that most of the breakouts are false. Now we will discuss what is going on in the live market. This has been made on the chart, so itis very easy for us to see, understand and talk.
But when there is a live market, there is a breakout, at that time, what we have to see is that the volume that was drained out earlier, whether the volume has increased or not, now you see that when the price started rising again, the volume has increased. If the volume has increased, then it means that this breakout is correct.
If there was no volume here, then this price could have fallen even after rising a little bit. Okay, what we have to understand about the second concept here is that when you have breakout, then how will you enter now. We understand the breakout, then we will also understand the breakdown. When you understand here that the breakout has happened, you saw after the breakout that the volume is coming, you entered, you understand one thing that as soon as the resistance crosses, the price will try Togo to its next resistance.
This resistance is of yesterday, which we said yesterday that the last swing, we plotted this resistance ourselves. We saw that the price has got resistance again and again, so if the price breaks its resistance once, it will go to the next resistance. The price starts rising, what happens to the stop loss for the price, the same resistance that has broken, now it has become support. Here it was resistance, but now it has become support.
The resistance that the price broke, you see, it came to almost the same level and took support again and the price started rising. Now this re-entry can also happen for us because the volume is very strong below.
Because the volume is strong, we get confirmation that the price will try to go to its next resistance. Now the market has closed here, but understand one thing, if you see here, we understood two things, one thingies support resistance and the second is what is the trend.
Here we are looking at a5-minute time frame, if we are 15 minutes, the bigger the time frame, the more our accuracy will increase. There is also a chart pattern here, we will discuss it later. In this series, we have to understand the chart patterns, but for now we have to see which trend is going on.
If you follow the trend, then you understand that the price is constantly making higher highs because it is making higher highs and there is more volume here, so if you are looking at the price action, then the trend is going on.
The next day the market opens, see this is today’s market, the market is open from here, we have talked that when there is a green candle, the open is always from below, the close is always up, so a very big green candles made. The trend is going on, after that, we will see the chart patterns later, we will talk about it later, trading the chart patterns is also a price action, but we have to understand it.
Anyway, I will remove it, so you can see that the market has consolidated, after that you can see here that there is not a very big green candle. Anyway, I am showing you that there was a breakout for you, so the breakout came, the volume increased at the time of the breakout, before that it was drained out, because the volume has increased, youkan takes an entry.
Now, should I plot support resistance myself, I have this method, secondly, we told you that you use simple pivot points, so you got the pivot points, now the way you see the pivot points, this breakout was a breakout of the chart pattern, so now support resistance is according to the pivot, now support and resistance you can plot by yourself, how, if you see here that the price went up from here, after that the price is getting rejection at what level,
if you see that the price was not able to break this level, because it was not able to break this level, then this is our breakout candle and there were volumes below, again we will call it breakout, where will the price try to go, in its next resistance, so the next resistance goes from R1 to R2, it is not able to cross R2, now let’s understand the breakdown here, now for the breakdown, the first thing we have to see is that the price went up, where did it get continuous support,
it got continuous support where it was resistance for it, resistance support was made, when the breakout came then this area was resistance, but when it started falling from above, the price got continuous support, but when it broke its support, where willet go next, on its next support, this line of R1 below, if you see, then how good is the support, the price used to come again and again and take support around that area, now what you see,
the price was not able to break R2 from above, it starts falling again and it is getting support again and again, the resistance that we had, now it is doing the work of support again, the price is taking support around that area, but you see that candle is made, where youkan clearly see that there is a breakout, here the breakout happened, and when the breakout happened, after that you see that the volume of the next candle is more, the volume came, now despite the volume, you took the entry,
why did you take it, because our purpose is that whatever candle gives a breakout, as soon as the low of that candle breaks, you take the entry, so you took the entry in the next candle, you took the entry, do you know what was your stop loss, the support that you broke has become resistance, the price goes down, but after that it starts bouncing back and your stop loss hits, I will tell you one thing, learn to give stop loss to the market, get out of stop loss,
now you have to see what is going on, you have to understand the price action, generally will write it down and explain it to you, that the price comes back to retest, it bounces back, but it does not reach R2 and starts falling again, now when it falls again, you see that there is a breakdown again, after the breakdown, you wait for the next candle, you see on the next candle that the volume is less here,
no problem, after that you see that the low break is done, as soon as the low break is done, you have to check the volume, the volume is less, this false breakdown could have happened, but after that the volume starts increasing, the volume starts increasing in the next candle and you see that the low break has happened again, now when the low break has happened, you take the entry again, you took the entry again on the breakdown, what is your stop loss, this is small, thesis our resistance after the support breaks, this is our stop loss again,
now if you take trade according to 1 is to 2, 1 is to 3, then you have goat very good trade here, but you have to identify what is going on in the market, now the volumes are high here, volumes are high means we will remain, now in the next Blogs am going to tell you indicators that you will use with it, we are not using any indicators except pivot points,
what we are taking from the pivot points is that we know the multiple levels of support and resistance, now as soon as you see what has happened again, let’s say you have not taken entry here, you have seen that one candle has broken R1,means there is a breakdown, there is volume with the breakdown, you will say yes, there is volume, because there is volume, you have to wait,
you can wait for the second candle, because the load break has happened, as soon as the load break has happened in the second candle, you take the entry because there is volume below, before this there was no volume, but now there is volume, because there is volume, you have taken entry, now what is your stop loss, the support of R1 has broken, this is your stop loss and again according to 1 is to 2, 1 into 3,
see the trade is going well, price action, now what we see, now what we have to see, you have taken multiple support and resistance, either you can follow the pivot points or you can yourself make the support resistance, both should come.
Now generally the rule says that if R1 is broken, then how far will the price go? The price will go to the pivot. From the area of the pivot, he can get buyers again and the price can go up. So now my level, I will take the target. My target is very simple. I will remove something here. I will remove this multiple level. Now you are not too confused. We are trading according to the pivot. So if R1 is broken, then the price will try Togo up.
Now we do not have to wait for the exact level of the pivot. You can see around it that here you make a rectangle. The rectangle gives you better confirmation that you have made a zone around the pivot that my zone is done. One second, I have made a rectangle here because you people are not confused.
You do not think that the price will go exactly up. As soon as it comes around the zone, you can book your profit and you can trail. Now what is this trailing? Trailing is very good. See what happens, you will see it yourself generally.
When the market breaks, it breaks very fast. If you are trading in the right instrument, then good money will be made. I will explain the right instrument to you later. It could be that you can understand that it can be put buying and call selling and it can be trading in futures.
So I want to tell you that the price will try to come around this zone and the volume is not decreasing below, which will make here. What does it mean to trail? Let’s say I had taken the entry here on this candle. Now what am I going too? I had this stop loss. Now as the price is going down, what am I seeing? Now I have reached this candle.
Now what I will do is I will take the stop loss of this candle’s high. If its high breaks, then I will go out. If the price tries to bounce back again, Theni need this much profit. Now after this, another candle will be made. So what I will do, I will see what will happen to me. The next candle is made; my stop loss is there. After that, the next candle will be made. The next candle is breaking continuously.
I will take the stop loss of its high. So if the price has come up to here, if it breaks the pivot, then it will come to support. I am trailing my stop loss. So what is happening? Now the next candle is made. Well and good. The next candle is made. Now you are seeing the price action in front of you. I know how far the price will try to come. It will try to come to the pivot. It can bounce back after the pivot. Now I am trailing my stop loss.
My stop loss has gone from there and has reached the high of this candle. Now this candle is running. Now this candle is running. After this candle, the next candle will be made. I will take my stop loss of this candle’s high. After each candle, I will go by trailing my stop loss. So price action, now you are watching live.
You are understanding how we did it when we did the breakout trade. How we did it when wearer doing the breakdown trade. There are only two things important in breakout and breakdown. Support and resistance and volume.
The person who understood the support, resistance and volume, can do the breakout and breakdown trade. And what is the most important thing being that if you leave the volume, then you will not be able to take the breakout and breakdown trades.
So when the trend is changing, you are entering it as soon as it changes. But respect your stop loss. Stop loss is that you go out because most of the breakouts and breakdowns are also false. So you have to give stop loss to the market that take it, but when there will be a profit, you will have a big profit. So I hope you understood this concept. So I tried my best to explain the breakout and breakdown. I told you that I will explain little more to you.
What is important in that, I just tell you that you have to understand one thing that the price always comes to retest. Suppose this is our resistance, this is our support. Thesis resistance, this is our support. The price is going on, going on, going on. You saw the breakout, but the price can come down to retest and it can group again. So retesting is not to be afraid here.
The entry is again available; you can take the entry again. The price is falling down. Now it fell here. It can come up to retest again, but then it can fall down. So you can get the entry again and again. So this retesting concept should always be kept in mind