🔥Pregnancy line diagram teaching ⬇️ Confirm pregnancy line entry 👇

======================
1. Confirmation of Pregnancy Line
Imagine a consolidation range where the price has been trapped within the range for a long time, suddenly the price starts to break out and closes above the range (red candlestick), this phenomenon indicates that buyers have overcome sellers at this moment, and the market "may" continue to push upwards and enter an uptrend. See the chart below 1⬇️
======================
But then the question arises: how can we ensure that this breakout is valid and not a false breakout? The market is likely to reverse and return to the range again, isn't it? See the chart below 2⬇️
======================
Therefore, one way is to wait for the price to retrace and not break the high of the previous oscillating platform to determine that the breakout is true. But a lot of real breakouts don't go back, and we often see the price go straight up, which will make you miss a very good long opportunity. Figure 3⬇️ below
======================
So, if the market really does not pull back, I generally choose the second method, which is to use the engulfing line to confirm the validity of the breakout.
======================
🔥2. What is a pregnant line?
The pregnancy line, also known as the mother-child line, consists of two K lines: the first larger one is the "mother line" and the second smaller K line is the "child line," with the child line being contained within the mother line. Key point: Just compare the highest and lowest points; whether it's the body or the wick doesn't matter. See the image below 4⬇️
======================
Uptrend: The left side of the chart indicates that the bulls no longer buy further in the second phase, resulting in a small green candle; Downtrend: The right side of the chart indicates that the bears no longer sell further in the second phase, resulting in a small red candle; The appearance of a child line immediately after the mother line indicates that both buyers and sellers in the market are hesitant, just like a service area on a highway, where everyone chooses to rest and adjust before continuing their journey. At this point, everyone should understand the candlestick pattern and the reasons for its appearance, so let's use the candlestick pattern to help assess the authenticity of breakouts in a volatile market. See the chart below 5⬇️
======================
If the price breaks upward out of the fluctuation range and a pregnant line appears, it indicates that both buyers and sellers are beginning to hesitate, and the market is in a state of rest and adjustment. See the chart below 6⬇️
======================
At this time, if the price continues to rise, it indicates that the buyers remain dominant, while the sellers' attempt to push the price back into the range has failed. Therefore, the breakout of the engulfing candle further confirms the validity of this breakout from the range, and subsequently, the price continues to rise.
======================
🔥3. Let's go back to the real chart and show everyone an example:
On the 15-minute chart of GBP/USD, the market failed to break through the resistance level three times, and then the price hit the resistance level for the fourth time and formed a breakout. See the chart below 7⬇️
======================
After breaking the resistance level, a pregnant line pattern is formed, with a small doji indicating that neither the bulls nor the bears have won, and the price begins to hesitate.
======================
Then there are two scenarios: (1) the seller is stronger, and the price is pushed back to the original level, indicating that this was a false breakout.
======================
(2) The buyers are stronger, and the price continues to rise, indicating that this breakout is valid. Next, let's see how the price will develop in the real situation? As shown in Figure 7⬇️
======================
The market has chosen the second scenario, which is that the price continues to push upward, thus the breakout is valid and not a false breakout.
======================
🔥4. So how can we participate in this transaction?
Generally, Brother Liu will prioritize going long after a breakout, and will observe when the price breaks above the high point of the mother line when a pregnant line appears. After the breakout, I will intervene and place the stop-loss below the lowest point of the child line. Enlarging the chart will make it clearer for everyone: see the image below 👇
======================
After entering the market, I plan to close half of my position when the profit-loss ratio is 2:1, and the take-profit point for the other half can be set at a resistance level that hasn't been tested before, or you can also use a trailing stop to protect your profits. Let me show you how the market is likely to move next: see the chart below 9👇
======================
🔥Have you learned it?
Please remember: the market is not something that can be predicted in advance by anyone. We only make trading plans based on existing observations. If the market trend does not align with our trading plan, we decisively abandon it. A very important trait of a professional trader is to maintain patience and only wait for their own trading opportunities.
#alpaca# #sol# #sui# #eth# #btc#