HOW TO TRADE A BREAKDOWN

Hello everyone. Today we will discuss a very important topic - trading after the breakdown of the level.
As it turned out, not everyone knows how to trade correctly in such market situations, so let's start learning.

Trend
Trend is our friend! Everyone knows this expression, but do not forget that the trend will end sooner or later and the price will go in a different direction.
Such situations can potentially be very profitable for a trader.
Breakouts happen not only during a trend, but also in accumulation zones.

Identification
To find an opportunity to trade a level breakdown, you need at least two conditions:
1. There must be a trend or an accumulation zone.
2. You need to wait for the breakdown of the level.

How to trade?
There are a couple of principles of proper breakdown trading.
First, we find a trend movement (or accumulation zone), draw a support/resistance line and wait for the moment when the price breaks through this line.

However, one breakthrough is not enough.
There are many situations in the market when the price makes a false breakout, so you need to wait for confirmation.

After the breakdown of the level, the price should close below the level - this means that the balance of forces has changed in the market, the trend has dried up and now the bears are pushing the market.
And only after that we have to wait for the most important condition - repeated testing of the level.

Very often, beginners are in a hurry, without waiting for the level to be retested, which leads to large losses.

After the breakdown, the price should return to the level again – this is the bulls again trying to rule the market, trying to bring the price back over the level.
But the forces are no longer enough and the price, after repeated testing, turns around and follows a bearish scenario.

It is after the reversal that it is worth opening a position, since it signals the weakness of the bulls, the market is no longer able to move up.

It is worth noting that the price may not always return to the level of the broken level.

From time to time, you will observe how a small incoming movement is made in the direction of the level, but there is not enough strength, after which the price reverses without retest.

Conclusion
This topic is very important, this pattern is very profitable, but without patience and proper entry, you can incur losses.
Do not forget to put a stop loss, which is best set above the level.

All these rules also work for breaking the bearish trend, only in the opposite direction.
Trade wisely, good luck to everyone!


Traders, if you liked this idea or if you have your own opinion about it, write in the comments. I will be glad 👩