MarketVuShow and CyberTrader present * Linda Raschke www.LBRGroup.com

What types of patterns precede breakouts What types of patterns precede breakouts? We know that the market alternates between range expansion and range contraction….

Trend moves come out of Consolidation periods, but these are often marked by noise and false breakouts

After a trend move to a new level, price winds back to an equilibrium level. Predicting the direction of a breakout from these points is difficult

We DO know that the longer the sideways line, the greater the potential move

Technical Structure as marked by waves – this chart still shows solid uptrend – (a downside breakout from a trend reversal from up to down would come on break of 108 - low AFTER an A –B_C down)

The length of the swings up and down are narrowing and an equilibrium point is forming. If you can take a ruler and draw a sideways line that goes through a majority of the price action, the market is setting up a breakout play.

Once a breakout has occurred – there are plenty of opportunities to trade if you miss the actual breakout. Up waves are shorting opportunities in a down trend

Once again, a narrowing of swings and a “sideways” line precedes the breakout point – a perfect triangle pattern like this does not always form.

Short term trend reversal from up to down Short term trend reversal from up to down. Breakouts from trend reversal plays (which often look like mini head and shoulders patterns) tend to not carry as far as breakouts from longer sideways lines and triangles.

ALWAYS trail a protective stop on a breakout in case it is false.

A low ADX indicates accumulation or distribution.

A Low ADX highlights equilibrium points

Low ADX- time to draw in trendlines!

The best breakouts do not have convenient retracements Buy new momentum highs, Sell new momentum lows.

Both price AND the momentum oscillator confirm an upside breakout

Momentum precedes price Momentum precedes price. Momentum on the short time frame precedes that on the higher time frame

New momentum lows confirms price low after downside breakout from a coil

The more unusual the event, the stronger the message the market is telling us

Unfilled gaps lead to trend moves after breakouts

Erasing the Impulse is another type of pattern that sets up momentum move in the opposite direction

Short term – erasing the impulse

NR7, WRR, triangle breakout, ID

2 back to back Ouch Reversals in G

Basic Tick Stuff – Down Trend (4/29)

Basic Tick Stuff – Down Trend (4/13)

Uptrend (3/25)

Trend Day Up with TICK and TRIN plotted beneath (1min Chart of SP’s)

Trend Day Down with TICKS and TRIN plotted beneath (1min chart SP’s)

Trendless-Sideways Day plotted with TICK and TRIN (1min chart of SP’s)

Trend Day Up with TICKS and BREADTH plotted beneath (1min Chart of SP’s)

Trend Day Down with TICKS and BREADTH plotted beneath (1min Chart of SP’s)

Non confirmation with breadth and ticks

Non-confirmation Buy in Ticks and breadth, followed by trend up in the breadth

Non confirmation sell at the end of a swing

Trend day UP confirmed by trend up in the breadth

Trend day up – Tick Detail

The End – Thanks for Attending! www.LBRGroup.com Copyright © 1996-2005 Linda Raschke and LBRGroup, Inc. All rights reserved.