Confirmation

  • Validation of the breakout is called Confirmation.
  • The last logical event is confirmation which is the final necessary step because it validates the breakout.
  • This is important because in real time it is always difficult to know if they were dealing with a true or false breakout.
    And thats critical for the decision making process...
  • Harmonic Relationship
    The harmonic relationship is expected between effort (volume) and result (price action).
    Means it shouldn't break the level and must hold it after breakout.

Extra Info:

The confirmation usually a clear event in the chart because at this point(the confirmation point), the trend will be in effect, and this is where the harmonic relation between impulse movements (movement with trend) and correction movements (movement against the trend, also known as retracement points) is expected.

So there will be an increase in volume on impulse movements and a decrease in volume in corrective movements.

Accumulation

In an accumulation, critical movement is to wait for a confirmation, formed by no supply candle testing the support formed by reaction and after this sign of strength candle (meaning medium to wide range bullish candle).
  • In the accumulation the breakout of the range (formed by reaction) is called the sign of strength or JAC (jump across the creek).
  • The 7th logical event (confirmation) is called last point of support in an accumulation.

Distribution

In the distribution, the critical moment is to wait for the confirmation formed by the no-demand candle, testing the resistance formed by reaction, and after that seeing a sign of weakness candle (meaning a medium to wide range bearish candle with medium or high volume).
  • In the distribution the breakout of range (formed by reaction) is called sign of weakness or FTI (fall through ice).
  • The 7th logical event (confirmation) will be called the last point of supply in distribution.
Scroll to Top