Strong vs Weak Action on a Breakout

In this video from Axia Futures, Richard leads discusses the two potential breakouts. The first was a failure to the downside after breaking the 28 level in the German Bund, the second was a successful breakout to the upside when the 47 level was broken.

In the first example we see how the pace of the market picked up while approaching the 28 level and became of interest to take a short position. However, the first warning sign appeared when the bid reloaded and came straight back at the critical breaking point and only sold 55 lots instead continuing the momentum of heavy selling. This signaled that no one was willing to push the market further and that the breakout was unlikely to continue.

The next example is a clear contrast to the previous and played out in line with what one would expect to happen during a successful breakout. We see a quick move up, a brief stall, and then another push higher. Throughout the upward advance almost nothing was sold and the bids were happy to continue quickly shifting higher without any offers reappearing. Finally, the sign to exit the trade was on a last quick jump at the peak of the move, showing desperation from any traders who had missed the move.

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