by Trendlines are easily recognizable lines that traders draw on charts to attach a series of costs together or show some data’s best fit. The resulting line is then wont to give the trader an honest idea of the direction during which an investment’s value might move.
A trendline may be a line drawn over pivot highs or under pivot lows to point out the prevailing direction of price. Trendlines are a visible representation of support and resistance in any time frame. They show the direction and speed of price, and also describe candlestick patterns in periods of price contraction or price action trading.
Trendline Breakout Strategy
If we had established a trendline breakout strategy then someone with experience in turning trends into trades could implement it and make a quick profit.
I understand if you don’t have any knowledge in this area and believe that the trends we follow will not break.
This is the reason I suggested not following the trendlines because we do not want to place undue bets and risk losing all our money.
However, my general strategy would be to follow the trendline trend in day trading. However, if you can correctly identify an uptrend, which is breaking out then we can anticipate an increase in price for the stock and buy before the price reaches the breakout point. In the ideal scenario, the price will increase over the next 2-3 months.
Stock Price Predictions
To start, let us assess the price chart and do a quick price forecast of CDSL. The chart is below:
The blue line corresponds to the trendline. Note that the green line did not break the trendline after breaking through it. This gives us a clue that the trendline trend did not break. Therefore, I conclude that the price will keep on trending down.
One may argue that the price is rising and breaking out of the trendline. However, this is only the first price breakout. When the price breaks through the trendline, it is now over the previous price trendline and we have entered the new price trendline. Once this happens, we can expect the price trend to continue in the downward direction. Therefore, it is important to follow this trendline breakout strategy.
When the breakout starts happening, one can check the price to identify the price target. One could use the DMI trendline. However, when the DMI starts breaking through the price trendline, it is a sign of a new breakout.
Breakout Strategy
If we observe the breakout of CDSL Stock, we would see that the price has broken out from the trendline but the price is still under the last price trendline. One may say that the breakout started at the last price trendline. However, this is not the trendline. When the price starts breaking out, it is a trendline breakout and we are seeing this trendline breakout. Therefore, we are in the breakout strategy of breaking out of the last price trendline.
If we are unable to find a trendline breakout strategy from the last price, we can still identify a breakout from the upper trendline. This would also happen when the price breaks through the trendline.
You may want to see a price chart for CDSL stock.
Therefore, if we observe a trendline breakout strategy of the upper trendline then we are seeing the breakout of the new price trendline and in consolidation, we can also see forming an inside bar candle which is also giving confirmation of price breaking in an upward direction. Then we can see the trendline breakout strategy of breaking out of the price. As long as the price trendline is breaking out then we have to take a risk and try to buy. However, we would be playing this strategy only if we can identify a breakout before the price goes above the trendline.
In upcoming Weeks we can see a trendline breakout strategy in this stock and then you can see the further rally in the stock how fast it is. Its again forming a flag and pole pattern with a trendline breakout strategy which can give a good profit in the upcoming days. If you want to take a position you can make it with strict stop loss.
KEY TAKEAWAYS
- Trendlines indicate the simplest fit of some data employing a single line or curve.
- A single trendline may be applied to a chart to grant a clearer picture of the trend.
- Trendlines are often applied to the highs and therefore the lows to form a channel.
- The period of time being analyzed and also the exact points wont to create a trendline vary from trader to trader.
Conclusion
After the breakdown from the trendline, the price went through the previous price trendline and broke out from it. This is a trendline break out which is under the previous price trendline trendline trendline. Therefore, we are in the breakout strategy of breaking out from the previous price trendline.
This is a breakout that will continue for several months. Therefore, it is important to follow the breakout and break the breakout out of the previous price trendline. Once the price breaks out, then it is over the new price trendline trendline trendline trendline. Hence, it is now a breakout of the new trendline. Therefore, we would see the price trend going upward for a long period.
This is the reason for playing this trendline breakout strategy of breaking out from the price trendline. Hence, I recommend selling cash after each breakout.
Is the Trendline Breaking?
The price broke the trendline. Now, the price is over the trendline. This is a sign of a breakout of the previous trendline.
Trendline breakout strategy for swing trading or day trading or are usually the best trading patterns to take the trade. This setup is very easy and simple to use just you need to keep patience and let your setup form and then you can enter your positions. Stoploss should be low or high of the previous swing for uptrend and downtrend and the target would be as per your risk-reward ratio. One should follow the Risk Management, Money Management, and Fear and Greed concept of the market to avoid big losses.
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