EagleTrader analysis: multi-dimensional judgment method for confirming market trend breakthroughs in the middle

　　Volatility breakthrough strategy is one of the important trading strategies widely adopted by many traders. In this strategy, accurately judging whether the breakthrough is effective is the key link that determines the success or failure of a transaction. Confirming a breakthrough based solely on a single factor often leads traders to misjudgment and leads to unnecessary losses. Therefore, it is particularly important to use multi-dimensional judgment methods to confirm the effectiveness of breakthroughs. Next, EagleTrader will analyze the judgment methods of breakthrough confirmation from multiple dimensions to help everyone accurately grasp opportunities in transactions.
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　　1. Price dimension

　　1. Close price breakthrough

　　Close price breakthrough is one of the most basic judgment criteria. When the market price is within a certain period of time, the closing price is higher than the previous resistance level or lower than the previous support level, this is usually regarded as a breakthrough signal. For example, on the daily chart, if the closing price of a currency pair is higher than the previous important resistance level for two consecutive days, then the credibility of this breakthrough is relatively high. Because the closing price reflects the market’s supply and demand power comparison at the end of a trading cycle, an effective breakthrough in the closing price means that the bulls or shorts have gained a dominance during this period of time.

　　2. Breakthrough Amplitude

　　Breakthrough Amplitude is also an important indicator to measure the effectiveness of breakthroughs. Generally speaking, the greater the breakthrough, the stronger the effectiveness of the breakthrough. When the price breaks through the key point, if it can quickly open a certain distance, for example, the difference between the price and the key point after the breakthrough reaches a certain number of points, it indicates that the market’s driving force is strong, and breaking through is not accidental. For example, in the euro
/ In US dollar trading, when the price breaks through the key resistance level, it rises by more than 50 points in a short period of time. This larger breakthrough is more likely to trigger subsequent trend markets.

　　2. Trading volume dimension

　　Trading volume plays an important role in breaking through confirmation. Trading volume is a direct reflection of market activity and capital participation. When the price breaks through the key point, if the trading volume increases significantly simultaneously, it means there isA large amount of funds are driving prices to rise or fall, and the breakthrough has been widely recognized by market participants and its effectiveness has been greatly enhanced.

　　For example, when the price of a currency pair breaks through the upper edge of the long-term consolidation range, the trading volume is magnified by 1.5
More than twice, which shows that the market has a high recognition of this breakthrough and is more likely to continue to rise in subsequent prices. On the contrary, if the trading volume does not change significantly or even shrinks during the breakout, then this breakthrough is likely to be false and is a market inducing long or short behavior.

　　3. K-line pattern dimension

　　1. Swallowing form

　　Swallowing form is a very typical K
The line reversal pattern has important reference value in breakthrough confirmation. When a large positive line completely swallows the previous negative line, or a large negative line completely swallows the previous positive line, this often indicates a reversal or breakthrough in the market trend. For example, in a downward trend, a large positive line swallowed up the previous small negative line, which may be a signal that the bulls began to counterattack, indicating that the price may break through the downward trend line upward.

　　2. Hammer line and hanging line

　　Hammer line and hanging line usually appear at the bottom and top of the market, which is a reversal signal. The lower shadow of the hammer line is longer, smaller in size and located in K
At the upper end of the line, it indicates that the market has encountered strong support during the decline, and the bulls have begun to fight back. The upper hanging line is opposite to the hammer line, with a longer upper shadow line, smaller solid and located in K
At the lower end of the line, it indicates that the market encountered strong resistance during the upward process and the bears began to exert force. When these special K
When line patterns appear near key points, such as support or resistance levels, they can serve as important basis for breakout confirmation.

　　IV. Technical indicator dimension

　　1. Moving average

　　Moving average is a widely used technical analysis tool that can help traders judge market trends and support resistance levels. This can serve as a breakout signal when the price breaks through the moving average.

　　For example, when the short-term moving average crosses the long-term moving average, this is called
“Golden Cross” is a buy signal that the price may break through upwards. On the contrary, when the short-term moving average crosses the long-term moving average, this is called
“Death Cross” is a selling signal that the price may break down.

　　2. MACD indicator

　　MACD indicator is a trend tracking indicator, which consists of DIF lines, DEA lines and MACD columnar lines.. When the DIF line passes upwards through the DEA line, a MACD is formed
Golden Cross, this is a buy signal that the market’s bullish power is increasing and the price may break through upward.

　　When the DIF line passes down through the DEA line, a MACD dead cross is formed, which is a sell signal that the market’s short power is increasing and the price may break down. In addition, MACD
Changes in the columnar line can also reflect the changes in the market’s momentum. When the MACD columnar line turns from negative to positive and gradually amplifies, it indicates that the bullish force in the market is increasing, which is conducive to an upward breakthrough in the price.

　　5. Time dimension

　1. The sustainability of breakthroughs

　　The sustainability of breakthroughs is one of the important factors in judging the effectiveness of breakthroughs. If the price can be maintained above or below the breakout position for a period of time after breaking through the key point, this indicates that the breakout is effective.

　　For example, when the price breaks through the resistance level upward, in the next 3 – 5
Within one trading day, the closing price is always higher than this resistance level, so this breakthrough has high credibility. On the contrary, if the price breaks out quickly and returns to the original range, then this breakthrough is likely to be invalid.

　　2. Verification of different time frames

　　Price trends under different time frames can verify the effectiveness of breakthroughs. For example, it is observed on the daily chart that the price has broken through important resistance levels, and you can further view the 4-hour chart or 1
The hourly chart shows whether there are corresponding breakthrough signals in these smaller time frames. If the consistency of the price breakthrough can be seen within multiple time frames, the reliability of this breakthrough will be greatly improved.

　　To sum up, in foreign exchange trading, there are limitations in judgment of single factors, and multi-dimensional judgment is the right way. Price, transaction volume, K
Multi-dimensional analysis such as linear patterns can confirm each other, which can greatly improve the accuracy of breakthrough confirmation. I also hope that this article sharing can help you flexibly use these methods in trading, improve your chances of winning, and move forward steadily in the foreign exchange market.