Breakout Indicators
Often the market will build lengthy platforms during a value-oriented market rather than a speculative market. Platforms are sideways patterns or consolidation patterns of price action. When a platform builds, the market participants that comprise smart
money, are waiting on news. They enter the stock early, in expectation of a strong move up once the news comes out and smaller investors rush to buy the stock. The platform is a common pattern that forms when value and earnings create velocity moves. The platform is also a period when the underlying energy in a stock is building and the moves out of the platform will be either a strong velocity-momentum move, or a big gap.
There is only one way to capture such big profits and that is to enter the stock prior to the move or gap. That is where breakout indicators become most valuable to traders. When the market builds platforms it is critical to use breakout indicators that signal that a platform is getting ready for an explosive move up. You are able to enter just prior to the move out of the platform and are in the stock as it moves up strongly or gaps up.
Breakout indicators are critical to successful trading during platform building market conditions.
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