Zen Trading Tech

1. Purpose
2. Understanding the Basics of Breakout and Pullback Trading
   1. What is a breakout?
   2. What is a pullback?
3. Bull Sequence: Successful and Failed Examples
   1. Bull Sequence – H1 – Success
   2. Bull Sequence – H1 – Fail
   3. Bull Sequence – H2 – Success
   4. Bull Sequence – H2 – Fail
4. Bear Sequence: Successful and Failed Examples
   1. Bear Sequence – L1 – Success
   2. Bear Sequence – L1 – Fail
   3. Bear Sequence – L2 – Success
   4. Bear Sequence – L2 – Fail

Purpose

• The purpose of this article is to teach traders how to distinguish between trading a breakout and trading a pullback by understanding bull sequences and bear sequences.
• You’ll learn about both successful and failed breakout trades and how to identify key setups.

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Understanding the Basics of Breakout and Pullback Trading

What is a breakout?

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What is a pullback?

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Bull Sequence: Successful and Failed Examples

• Define a bull breakout sequence.
• How to identify successful bull breakouts.
• Examples of failed bull breakout attempts.

Bull Sequence – H1 – Success

• 1 = Breakout trade
• 2 = Breakout pullback H1
• 3 = Breakout and fade actual pullback (below low of bear bars)
• 4 = Breakout pullback new high (new breakout) – at high or wait for bar close
• 5 = Breakout pullback new high and fade pullback (below low of bear bars)
• Leg 3 stop trading breakouts!

Bull Sequence – H1 – Fail

• 3 got bear follow-through and ran stops soon after

Bull Sequence – H2 – Success

• 1 = Breakout trade
• 2 = Breakout pullback H1
• 3 = Breakout and fade actual pullback (below H1 and low of bear bars)
• 4 = Breakout pullback H2 triggers
• 5 = New High (new breakout) – at high or wait for the bar close
• Leg 3 stop trading breakouts!

Bull Sequence – H2 – Fail

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Bear Sequence: Successful and Failed Examples

• Define a bear breakout sequence.
• Key signs of successful bear breakouts.
• Examples of failed bear breakout attempts.

Bear Sequence – L1 – Success

• 1 = Breakout trade
• 2 = Breakout pullback L1
• 3 = Breakout and fade actual pullback (above high of bull bars)
• 4 = Breakout pullback new low (new breakout) – at low or wait for bar close
• 5 = Breakout pullback new low and fade pullback (above high of bull bars)
• Leg 3 stop trading breakouts!

Bear Sequence – L1 – Fail

Bear Sequence – L2 – Success

• 1 = Breakout trade
• 2 = Breakout pullback L1
• 3 = Breakout and fade actual pullback (above L1 and high of bull bars)
• 4 = Breakout pullback L2 triggers
• 5 = new low (new breakout) – at low or wait for bar close
• Leg 3 stop trading breakouts!

Bear Sequence – L2 – Fail

• Pullback very strong – probably need Low 2
• But no new low – stopped out