Review: USING SUPPORT & RESISTANCE LEVELS TO IDENTIFY A BREAKOUT
Rating: 5 out of 5
Date: 06 15, 2014
The purpose of Breakout Trading is to identify short term trading opportunities in a variety of markets.  Most of the time, stocks and currency pairs tend to trade within a well-defined range.  This range is often between support and resistance levels.  A Breakout occurs when the price of the asset goes outside of this range.  Movement must be in the opposite direction of the current trend to qualify as a Breakout.  The key technical indicators used in predicting breakouts are: MACD, Relative Strength Index (RSI), as well as economic data and events that affect trader sentiment.  Swanson discusses thoroughly the types of breakouts and how they occur before outlining the steps involved in Breakout Trading.  In the closing he emphasizes that although there is potential profit with this strategy, investors main concern should be in confirming whether the breakout is real or not since the majority are false alarms.  If economic data and events are not present, it is more than likely a fake out.  Great job!