CandlestickLearning

Breakouts on Intraday

Breakouts on Intraday

Breakouts compromise of two things:

  • Breakout Candles
  • Breakout Lines

Fig.1 

Here is a typical Open Range (15 mins) Breakout on a 5 minute chart.

Fig.2

Breakout Lines are primarily based on

  • Candle High and Lows
  • Candle Body Highs and Lows

In Intraday Trading on lower time frames like 5min to 30 min the requirement is of two consecutive 5min candles to esnure that a min of 10 minutes of one sided price action occurs.

The Breakout Lines in Intra Day Charts is based on Open Range of 15 mins. As said, there are two Breakout Lines, one High/Low of the Candles and the other based on Body High/Low of the candles wherein the highest open or close is the upside Higher Breakout Line and the lowest open or close as the downside.

Lower Breakout Line as explained in chart below (Fig.3):

Fig.3

The pink-dotted lines are the BO High and Low Lines that encapsulate the Bodies of the three first 5 minute candles of the 15 minute Open Range fro 9:15 to 9:30 am.

The next noteworthy lines for Breakouts are the Open Range High and Low formed by the first 15 mins of Open Range and shown as below (Fig.4)

Fig.4 

The blue line is the Open Range OR High Line due to the High of the Open Range.

The Red Line is the Open Range OR Low Line due to the Low of the Open Range.

As said earlier, we need two consecutive candles crossing the BO High Line OR High Line to give a Candle Breakout. A illustration of such breakout is as shown below (Fig.5):

(Fig.5)

For both the First and Second Candle there are rules:

  • The First Candle High or Close must have higher than or equal to the Value of BO High Line
  • The Second Candle must have a high and close both highest for the day till that moment of candle close

Below are some examples of Upside Breakouts

(Fig.6)

(Fig.7)

(Fig.8)

Below are some examples of Downside Breakouts

(Fig.9)

(Fig.10)

(Fig.11)

However, not always we would spot two consecutive one after another BH>50%CH Candles and many a times there are in between candles between this two BH>50%CH Candles referred humorously as the babies of the couple with the first candle as the Mother and the Second as the Father.

These Breakout Candles at times are highly Tiny and Lilliputian in compared to the size or  range and potent enough to touch day’s high around the day’s close.

 

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