$ENS BREAKOUT DONE What is a trendline break and how to trade it?
There is a breakout when the price crosses an important level. However, not all breakouts are created equal. There are preconditions for a breakout to be considered relevant:
Consolidation before the breakout.
A significant increase in trading volume.
Indicating investors’ enthusiasm to push the price as far as possible.
Regarding consolidation, breakouts often occur after forming a contraction pattern, such as a triangle or a wedge. During these market phases, the volume gradually decreases, and the amplitude of the movements does the same so that the price action evolves in a narrow range.
A sudden increase in volumes, as well as the exit of the price from the range, is often indicative of a new trend forming.
How to trade breakouts?
There are different ways to trade breakouts in the stock market, which are more or less aggressive depending on where you open your position.
