Continue reading...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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