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200 Day SMA and broke out higher just shy of the Oct/Nov highs. Now the the
commitment of traders for the bull flag trading range is about balance we will
wait for the breakout. Once price closes outside of the prior consolidation
channel those traders that are short will start to liquidate and cause price to find
support at the breakout level.
When I first learned Technical Analysis I was shown ideal setups that were
already completed, and they were all successful. The problem was during real
time charting the formations are not complete yet and we don’t know if they are
going to succeed or not. The best we can do is work to identify these setups in
progress and use our experience to judge if, when and where to enter into the
position as it is being formed in real time.
In this chart above we focus on the upleg and sideways consolidation of the bull
flag as seen through the volume profile.
The VAL and VAH are drawn in based on the volume profile rather than the
highs and lows, or opens and closes of the candles. By looking at the first
standard deviation of the channel based on actual transactions you’ll be working
with more accurate price levels; price levels which contain the majority of the
open orders.
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