Breakout (Real)

This is the 6th logical event of Wyckoff method, and it represent a true breakout of accumulation or distribution.
  • The breakout is called second CHOCH (change of character) meaning, that a change from sideways market to trending market.
  • In the reaction, the climax is confirmed and the market goes from trending to ranging mode.
  • In the breakout, market goes from ranging mode to trending.
Note: According to Wyckoff, 2nd CHOCH (change of character) happen when a market goes from ranging mode to trending or vice versa.
Extra Info: In the Wyckoff Method, 1st CHOCH happens at the time of “Reaction Event” when market move from raging to trending.
Creek/ Fall Through the Ice: These are the ranges created by “Reaction Event” in distribution or in accumulation.

JAC - Jump Across the Creek

A true break out of an accumulation is denominated as a sign of strength (means its Direction on buy side) or jump across the creek (see example below).

Fall Through The Ice

A true breakout of distribution is denominated as a sign of weakness (means its direction on downside) or fall through the ice (see example below).

Some More Info:

There are Three-3 main uses of False Breakout.
  • In Breakout context, the Strength and Weakness are not related to power of movement, but its related to direction.
  • In the breakout, traders should expect harmonic relation between effort and result.
    Note: In false breakout, there is there a divergence between effort (volume) and result (price action).
  • In comparison with support or resistance that was pre-established by reaction.
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