Before we conduct a breakout market transaction, we need to know that there are two main types of breakout market:

  1. Continuous breakthrough
  2. Reversal breakthrough

A clear judgment of the breakthrough category can help you grasp the true development of the overall market.

Breakthrough needs to attract enough attention because it means that the supply and demand of the currency pair you are trading are changing. This change can extend the previous trend of the currency pair and provide you with a good opportunity for further profit.

Continuous breakthrough

Sometimes, when the market experiences a large unilateral market, it may fall into a sideways situation. At this point, the buyer and seller took a breather and judged what they should do next. As a result, you will see the exchange rate going through a period of sideways consolidation.

If the trader believes that the initial trend is the correct direction of the market and may continue to run in the previous direction, then the result may be a sustained breakthrough.

Reverse breakthrough

The reversal breakthrough also appeared after the exchange rate experienced a large unilateral market, and then the price also showed a sideways pattern.

The only difference is that after a period of sideways sorting, traders believe that the previous unilateral market trend has ended and pushed prices to move in the opposite direction. As a result, the exchange rate exhibited a reverse breakthrough pattern.

Fake breakthrough

Now, you may very much want to make a breakthrough transaction, but you must be vigilant. Just as Kobe will make fake moves to deceive defenders, the market may also deceive you and send you false breakthrough messages.

When the price breaks through a certain level, such as support, resistance, triangle, trend line, etc., but it has not accelerated to fluctuate in the previous breakthrough direction. Contrary to this, the price subsequently quickly reversed its volatility and entered the previous trading range again.

The best time to enter a breakout transaction should be to wait until the price breaks out and retraces initially to determine whether the price retracement hits a new high or a new low, depending on the specific direction you are trading.

The best time to enter a breakout transaction should be to wait until the price breaks out and retraces initially to determine whether the price retracement hits a new high or a new low, depending on the specific direction you are trading….