This Breakout Of The Congestion Prior To The Taking Out Of The Entry Signal Is My Trading Filter It Is Important Because It Gives Me A Jump On The Market

If I have gotten into the trade very early (the nearest congestion area was distant from the breakout point on the daily chart), prices will almost surely test the area of the high or low that was the basis for my entry signal. The thrust that carries prices from the breakout of the intraday congestion to the area of the high or low is where I will make my money - EVEN IF prices only test the high or low and NEVER actually break out.

If I have gotten into the trade somewhat early (the nearest congestion is quite close to the breakout point on the daily chart), prices will almost surely make a new high or low. The thrust that carries prices from the intraday congestion to the new daily high or low is where I will make my money.

Let me illustrate this.

The daily bar for yesterday might look like this:

I want to buy a breakout of this high on the daily chart

I want to sell a breakout of this low ori the daily chart.

The five minute chart for yesterday might look like this:

yesterday's high.

Congestion closest to the high. As prices take out the high of this congestion, I u i 11 be long .

yesterday's high.

Congest ion closest to the low . As pr ices take out the low of this congest ion, I u i 11 be short.

I want to enter on a breakout of the congestion area, rather than on a breakout of yesterday's actual high or low.

But what if there is no congestion area upon which to base a breakout? Just such a situation occurred as illustrated below, and gives an additional refinement in my trading.

Here is a rule. If prices are making new highs or new lows relative to the last three days or more, I may enter based upon a non-gap breakout of yesterday's high or low. I'll show what I mean.

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