Master Genuine Stock Breakouts with Key Indicators

Many people aim to trade or invest their money when a stock shows a breakout, but they often struggle to determine whether the breakout is genuine or false. To address this, we’ll explore the key indicators that increase the likelihood of a true breakout .

In this situation, the chances of a successful breakout are high because there was significant buying interest as the stock began to rise. This movement caught sellers off guard, particularly those attempting to build sell positions to prevent the stock from crossing above resistance. When the stock moved against their expectations, these sellers likely closed their positions to avoid substantial losses, which temporarily caused the stock price to fall. As the price approached the support level, it became an attractive entry point for buyers who saw potential in the stock as a worthwhile investment.

In such cases, consider adding some quantity when a green candle forms after the large green candle. If the stock price falls, wait for it to reach the support level before adding to your position.

In this situation, if buyers dominate the market, we can expect a continuous formation of green candles, making it a good opportunity to enter the stock slightly above the breakout level.

For a more comprehensive analysis, also check the On-Balance Volume (OBV). This indicator helps you determine whether the breakout is supported by strong volume or if it is merely a hyped breakout.

Breakouts don’t always succeed, and in the next blog, we’ll explore scenarios where there is a higher likelihood of a fake breakout.

Additionally, I recommend conducting a fundamental analysis of the company. This will provide insights into the potential actions of major investors, offering a clearer perspective on the company’s prospects.

Thank you,
Prabhav Maheshwari
Ease Investors