Breakout Strength Analysis

These flashcards cover key concepts and terminology from the lecture notes on analyzing and understanding breakout strength in price action trading.

Breakout

A significant price movement through a resistance or support level.

Bullish Breakout

A breakout where the price moves above a significant resistance level.

Bearish Breakout

A breakout where the price moves below a significant support level.

Strong Bars

Bars characterized by substantial price movement with minimal wicks, indicating momentum.

Tick Gaps

Small gaps between consecutive bars, indicating stronger momentum (higher lows for bullish, lower highs for bearish).

Volume Spike

A significant increase in trading volume that confirms breakout strength.

Closing Price Extremes

For bullish breakouts, prices should close in the top 5-10% of the bar range, and for bearish breakouts, in the bottom 5-10%.

Micro Gaps

Gaps that occur between three consecutive bars without overlap, indicating potential strength in the breakout.

Follow-Through

The continuation of price movement in the direction of the breakout after it occurs.

ATR (Average True Range)

A measure of market volatility used to assess the significance of price movement in breakouts.

Contextual Strength Factors

Conditions enhancing the likelihood of sustained breakouts, such as trend alignment and previous attempts.

Retest

A return to a breakout level after initial movement, confirming the strength of the breakout if it holds.

Bar Size

The size of breakout bars compared to prior bars, ideally ≥ 1.5x-2x larger.

Wick Size

The length of wicks on a bar; minimal wicks indicate stronger breakouts.

Consecutive Bars

At least 3-5 strong bars in a row supporting the breakout direction.

Pre-Breakout Conditions

Indicators such as multiple failed breakout attempts that enhance breakout success likelihood.

Power Hour Breakouts

Breakouts occurring in the last hour of trading, often leading to continued movement into the next session.