Breakout
Reference notes
01Pattern conditions
Begin with a clear uptrend and a strong rally that the pattern can continue.
Price does not correct through price as in the Buy Setup. It corrects through time by basing—like resting to take a breather.
Use the rising 20-period moving average as the guide for whether the base has rested long enough.
02Execution map
The setup is ready when price breaks above the high of the completed base.
Enter above the base high and place the stop below the base low.
Use prior resistance as the first target.
03Variations
A breakout before the rising 20MA catches up to the base is early. Let it go rather than chasing it.
Bars cutting through the moving average signal that something is wrong with the clean setup.
James later shows a crossed-20MA setup that can still be played. Add its exact conditions when that example is reviewed.
Original sourceOriginal video source
Original video source
The 20MA is the timing filter.
The base needs enough time for the rising 20MA to catch up. These two cases warn that the correction may not be ready.
Early breakout
If price leaves the base before the 20MA catches up, the breakout is early. Let that attempt go instead of chasing it away from the timing guide.
Bars cross through the 20MA
When the base cuts through the moving average, something is wrong with the clean setup. James later shows an exception that can still be playable; its exact rule remains to be added.