What is a breakout, and why wait for the close?

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Accepted Answer

A breakout is a candle that closes outside a pattern's line. Waiting for the close, not just a wick through, filters out most of the fake moves that snap straight back. The close is the signal During a candle, price can poke through a line and come right back. That poke leaves a wick. A breakout counts when the candle closes outside the line: buyers (or sellers) held it there until the bell for that candle. Why it matters A wick through and back is often a trap: it catches people who bought early, then reverses. A close outside shows the move held for the whole candle. Our systems work the same way: they call a breakout only on a candle's close, never mid-candle. On which timeframe? The close of the candle on the chart you trade: a daily breakout counts at the day's close, a 4-hour one at that candle's close. Next: plan the stop and the target.