Breakouts on Daily Charts
Breakouts compromises of:
- Breakout Candles
- Breakout Lines
Breakout Lines are primarily based on:
- Candle High and Low
- Candle Body High and Low
In effect, a Breakout is a Body Breakout of a Candle from the Body of the Channel or the Rectangular Box encompassing the Range.
Breakout Candles are candles with Body Height > 50% Candle Heights as shown below in Fig.1
In Intraday Trading on lower time frames like 5minute to 30 min the requirement is of two consecutive 5 minute candles to ensure that a min of 10 minutes of one sided price action occurs.
However on Daily Chart one such BH>50%CH candle is enough as a Breakout Candle.
Breakout Lines are drawn on Bar Chart and in doing so the Open and Close of the Bar are encompassed to get the Body of the Range from where the Breakout will occur.
As you would see the ‘Rectangular Box’ encompasses the body of each daily candle and the highest open or close of that range becomes the Breakout Line which the body of the Breakout Candle must jet out from.
Some more examples of Breakout Confirmation are shown below
And last but the least Monthly Breakout on Bank Nifty that occurred recently. Refer Fig.5