IMHO, by definition..REAL breakouts shouldn't retrace at all.. If it retrace enough that it looks a real bargain on your chart.. it's very likely that it's a failed breakout..and what I usually do is go short into the retracement.. buying retracements is same as going against the trend..
assume a upside breakout..it retrace..which means going down.. if it goes down enough to make a difference..it means the trend has change to a downtrend.. it's logical..isn't it? read your own signature...breakout.. the trend is your friend..
I get the feeling you're attacking me, so I'll defend myself. A trend will rarely continue up or down in a straight line. It's common knowledge and widely accepted that there are patterns called pullbacks or retracements within a trend.
The 11 pages that have been put up represent a good discussion of stuff I think. I would like to use them to suggest some reasoning processes that might be helpful to you. To solve any problem takes real effort. Often examples of processes can lead to a new way to attack a problem. The way is really not new but it may be new to the reader. It is not bad to not handle a problem. If you can't handle it , then it is reasonable to go to another place to achieve a goal. Making money is the goal of most people here. By not handling false BO's and going to work making money on what follows false BO's what is happening is actually the same methodology that could be used to solve the false BO problem. The clear situation is that most posters here go to a place that immediately follows what they can't handle. What this clearly says is that they use the prior situation as a base for actually making money after that prior situation. Call the false BO B call trading retraces C. See B and wait to make money on C. It is a pairing of B and C and trading C. Here is my suggestion and also my method of dealing with everything I present. I will do it in a way that allows the posters to modify their sytuff with as little change as possible. For false BO's you need an A which preceeds the B I labelled false BO. The question is what comes before and during a false BO. I did slip in a comment with the word "during". Because I am oriented to anticipation, this reasoning is just what I do all the time anyway. I am not into reaction and prediction. All of this is fuzzy to certain mind and emotion sets. If this is fuzzy just enjoy the buzz. I will elaborate in several follow up posts. What I want to give you is a way to anticipate a false BO. I am busy at this time of day. BRB.
The turtle soup is a system which anticipates and trades false breakouts as opposed to the turtle system which trades breakouts - but these are on the daily time frame. Just wondering which occurs more often - false breakouts or true breakouts? pretzel
To get to a good place, it might be helpful to make a list of formations that form a sort of sequence of possibilities. It turns out that various formations also associate themselves with market paces and graph durations. For formations life is not quite that simple. Breakout failures are most closely related to BO"s that do not fail. If you have a successful BO strategy you obviously aren't far from making it possible to include BO failures. I will show how to do this soon . The next major group of formations related to BO's are the gap formations. There is little difference between gapping and BO's. It is just that gaps originate wyhen the market is closed and they show up at the open. Gaps fail too. So we have a kindred relationship connecting gap failure (more often called "retraces") and BO failures. Fortunately we can detect each of these the same way. No one posting is doing a detection for this so I will present a few some of which will use the data posters currently monitor. The remaining two sets of formations are espacially nice because they fit into the A group that precede the B (BO failures) focal point we have here. From the shortest bar duration grouping (and simulataneously the fastest pace markets) we can look at stalls and dips. These are five minute duration formations that in fast trends occur before the strength of the trend weakens. The weaker formations that follow are too remote for this stuff. The easiest associated formations that we have to deal with fit into about five categories by name. Pennants (3); congestion; convergence; centering; whipsawing and residual noise. Okay it looks like we can set up a pair (an A and a B) of connected items to anticipate B (Failure to BO). In addition to the pair, as described by price movement, we can slip in a couple of leading indicators to furthr our cause. BRB. Neutral market is on my mind.