Breakout Strategy
Trade breakouts from consolidation patterns.
What Is Breakout Trading?
Enter when price breaks a defined level with momentum.
Common Breakout Patterns
1. Triangle
↘↗
↘ ↗
↘ ↗
────────
Trade: Break of upper trend line
2. Wedge
↘
↘
↘
────────
Trade: Break of trend line
3. Rectangle
─────────
│ │
│ │
│ │
─────────
Trade: Break of resistance
4. Flag
┌───┐
│ │
└───┘
Trade: Break of flag channel
Entry Rules
1. Consolidation forms
2. Volume increases
3. Price breaks level
4. Entry on close above
Stop & Target
| Element | Value |
|---|---|
| Stop | Below breakout level |
| Target | Height of pattern |
Common Mistakes
1. False Breakouts
Fix: Confirm with volume
2. Chasing
Fix: Wait for retest
Key Takeaways
- Consolidation — Before breakout
- Volume confirmation — Essential
- Stop below — Protect
- Pattern height = Target
Related
smc.md >>>
price-action.md >>>
Trade momentum breakouts.