Seems to me many people use TA as a prediction tool, which IMHO opinion, is not possible. TA tells you where it has been but it cannot tell you where it is going. However, knowing where it has been is extremely helpful. Where did it get stuck before? Where might be buyers? Where might be sellers? Where might people be trapped? And when the price gets to those places, you watch to see who wins and then join in.
As for breakouts, I think it's best to let it do it and prove to you that the money is there, and buy the first pullback. I never buy or sell in anticipation of a break - because that would be like making a prediction. (One exception is trading futures where you can see where the stops are, and when the floor boys go on a seek and destroy mission, you can join in, like a cleaner fish latched onto the big shark - get fed and protected at the same time.) However, if something does break, then you can use Average Directional Index (ADX) or Average True Range (ATR) to help visualize the fact that the trading range is being expanded to one side, and then on the first retracement, take a position in the same direction of the break. Make the market show you the money. |
