1. Higher lows sequence - The first sign of an uptrend is higher highs & lows, it simply means people are willing to pay more and get involved. When you spot a higher lows pushing against a resistance multiple times, try to read the story behind it.
2. Moving averages - MA is a that takes the arithmetic mean of a given set of prices over the specific period. In this specific example we need to see the MAs slope upwards showing us that the dynamic support is giving us an extra bit of force.
3. Build up - This is where you'll find an entry at bottom range of the build up, anticipating a breakout beforehand (Accumulation of buy orders).
- You are getting yourself prepared by identifying the momentum beforehand
- More patient as your entry is early, it allows you to sit through the emotional rollercoaster if the market is just chopping around as you don't have to watch your P&L going red and green
- Ideal risk-to-reward due to your early entry
- It gives you time to re-assess the situation even if its a false breakout, because you're positioned beforehand
- If the market is pulling back according to your plan, you could begin sizing up and get ready to ride the fresh momentum
- There will be time where market fails and reverse against you
- You are going to miss out some opportunities during times where the market just rip through the highs
- It requires experience
Hopefully this gives you a different perspective in your current breakout strategies, kindly do your own research. Trade safe.
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