ajaymein wrote:One thing I need to make sure before progressing into thinking I am actually "figuring this out" is what a breakout candle is...this is what I think it is:
When there are 2 or more candles of the same color in a row, then the color switches and closes on the next candle (where you draw your ZL)...that is the candle I consider the breakout candle.
If that is correct, then what I am doing is waiting to see if the ZL gets wicked...if it does, then this tells you price is about to reverse. However, if it doesn't, I am disregarding that ZL and moving on to wait for the next ZL to appear until one that gets wicked appears and I can look to enter a trade.
Please correct me if I am wrong in the above statements or if any of you do things differently!
A breakout is simply when price passes through a point of reference.
The points of reference that I use are the OPEN, HIGH, LOW, & CLOSE.
If the prev. candle was bullish and there was a breakout short then it is assumed that traders entered between the OPEN & the LOW extreme.
If the prev. candle was bearish and there was a breakout short then it is assumed that traders entered between the CLOSE & the LOW extreme.
Next we see if there are wicks in the direction of our soon to be SL based on a line of reference.
The wicks don't mean @#$% without bodies (closes) in the direction of profit and that is why I tell you to wait for a close beyond your line of reference.
Study the picture again...