Article Range Breakouts and Trading Tactics

[T2W Bot]

Breakouts out of trading ranges are of the most respected price movements by technical analysts. Trend followers adore them and short term swing traders who base their decisions upon overbought-oversold situations get anxious at their appearance. Technical analysis textbooks have a special section devoted to range breakouts and almost all trading methodologies incorporate a strategy for them.
In this article I will briefly review the classic breakout strategy and discuss the Habit Force which is hidden behind the false breakouts. In the sequence I will discuss the CWTW and CounterAttack tactics.
Trading Ranges – Review and Classic TacticsIn figure 1 you may see how a classic trading range looks. As its name implies, a trading range is a strip defined by two horizontal lines (a resistance line and a support line) which encompasses the price values (black line) of a trading vehicle for a time period.
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[Rhody Trader]

This article reviews the classic breakout strategy and discuss the Habit Force hidden behind the false breakouts.

 

[Col_Stiffler]

Excellent article imho... thanks

 

[dbphoenix]

Nice article, professionally done. I hope that the author reproduces his TASC article on volume and candlesticks as an accompaniment since I'm not persuaded (who cares?) that -- within the context of this article -- volume and candlesticks would help clarify rather than cloud the course that the trader should follow. Generally speaking, the simpler, the better.

And while I do have a few quibbles, I caution the beginner to avoid anthropomorphizing price and the market too much. Doing so can lead to a Follow The Bouncing Ball mentality which can lead to expensive mistakes. Remember that traders are moving price and thus the market. I personally find it helpful to focus on those traders rather than on an amorphous market blob, or the Bouncing Ball, but what is good for me may not be good for everyone. In any event, the author's use of "habit" to characterize this behavior is an excellent example of viewing something classic in a novel way in order to open a window or two.

--Db

 

[bracke]

A very useful and well explained article.

Without wanting to appear critical or carping may I suggest that a T2W 'person' should adjust the grammatical anomalies which may cause misunderstanding

I certainly intend to look for the'volume spikes' article mentined by the author.

Thanks for an informative article.

Regards

bracke

 

[techst]

I'm not overly keen on this article, although I can see what he's going on about, It's not really groundbreaking stuff. But a good re-write on trading ranges. The last two well chosen examples are actually long term bases and not trading ranges.

 

[bracke]

I'm not overly keen on this article, although I can see what he's going on about, It's not really groundbreaking stuff. But a good re-write on trading ranges. The last two well chosen examples are actually long term bases and not trading ranges.

techst

My understanding is that these articles are for beginners/intermediates. They give a basic understanding of the subject which the reader may follow up with additional reading if they wish to.

For the intended audience, groundbreaking stuff is not required at this stage, merely good basics.

Question: When is a long term base not a trading range?

This post is not intended to be critical of your post merly an observation and a question.

Regards

bracke

 

[Oliver Su]

Clearly re-stated an old trading concept.