I thought of posting a simple chart illustrating upthrusts and springs, as I apply this approach to most of my trading idea. This will help you identify what are the false breakout that occurs and where it usually occurs.
What is a Spring? 1. They usually occur late within the trading range 2. Serves the propose of providing market makers with additional supply from the weaker hands at the lowest prices 3. If volume of the breakout of previous support is very low (no real supply) then you can expect a spring to occur
What is an Upthrust? 1. Occurs in the trading range of distribution. 2. The price move above the resistance level of a trading range that quickly reverse itself and moves back to the trading range (happened in Bitcoin few days ago) 3. Its a bull trap, where it appear that there will be a start to a new uptrend but in reality marks the end of the up-move
Of course, there is much more to learn about them, so look up these terms and get to know them better if. Some traders actually live off trading only upthrusts and springs!
Please feel free to ask me anything in the comment section below - Lets keep it an open discussion as we did last time! - Abdulla
Thanks again Abdulla that is a very interesting concept. Was just looking at OmiseGo 4 hours chart and I spotted a spring on the 21st of October but I’m not 100% sure. Could you confirm that and maybe analyze OmiseGo and share what are your thoughts on it?
abdullatrader
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@mghazaleh, Thanks for your kind comment - Indeed, good catch!
Interesting thanks for sharing! I saw many times the upthrust; I feel your analysis very easy to understand and with strong fundamentals, can you share your ideas about BCH or BTG? It will be interesting your analysis....
abdullatrader
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@IsraelOrtega, Thank you! I'll have a trading analysis idea posted on BCH in the coming hours.