What are peoples' thoughts on breakout candles being good or bad when the length is short? Say I get into an uptrend (a new high), or break a horizontal channel, and the breakout candle has good extra volume but is small (e.g. 20% average length)? Worth going in and why/why not? What does it tell us?
Breakout candle length
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tech/a
No Ordinary Duck
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This is a very strong indication (if supported by volume) that supply is stopping buyers from having to pay more.
I would need to see the next bar.
Often this will be absorption/accumulation and may take a few goes before all excess supply is taken up---effectively giving a resistance area.
THEN
Price often moves ahead without much effort making new highs.
I would certainly keep it in a watch list and expect a pull back from the squat bar.
You'll be able to see supply waning ---price will either move in large ranges or lower volume
I appreciate your detailed response.
Why would people sell at higher prices above the breakout line? they would see that price is rising, so why not let it rise more. it comes down to what people are thinking to do and why they are thinking like this, which is not obvious.
Why would people sell at higher prices above the breakout line? they would see that price is rising, so why not let it rise more. it comes down to what people are thinking to do and why they are thinking like this, which is not obvious.
Trembling Hand
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From a short term trading perspective. If you are holding a large position from much lower you need large volume to exit and without moving the market adversely against you. The best time to unload that is when people are scrambling to get in at any price. Thats at a new high.
tech/a
No Ordinary Duck
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Could also be from a long term view as well
