Start by importing the Breakout Script and have a look at the chart
- Breakout Score
The Breakout Toolkit calculates a Breakout Score to determine if the market is Breaking UP, Breaking DOWN or in a Consolidation Zone.
The Breakout Score range is -50 to +50.
When the Breakout Score is above 10
When the Breakout Score is below -10
When the Breakout Score is between -10 and 10
- Breakout Candles
Turn on Breakout Candles in the settings window to visualise the Breakout areas and Consolidation Zones by the candle color.
White Candles = Consolidation Zone
Green Candles = Break UP
Red Candles = Break Down
- Breakout Background
Turn on Breakout Background in the settings window to visualise the Breakout areas. The thicker the coloured background the stronger the Breakout.
When the background border meets the candles, a new Consolidation Zone will begin.
- Consolidation Zones
Avoid entering a trade during a Consolidation Zone. These areas often have low volatility, low volume and unexpected changes in direction.
Always wait for a Green or Red Break UP or Break DOWN label.
There is a much greater chance of a winning trade when trading in the direction of a Breakout rather than within an unpredictable Consolidation Zone.
- Breakout EMA
The white EMA line acts as a secondary confirmation by changing to Green or Red when a trade is confirmed.
In the image below, the Break DOWN has a white EMA which changes to red when the Break DOWN is confirmed. Where as the EMA changes from white to Green on the candle following the the Break UP.
- Breakout Confirmation Triangles
Small Green and Red triangles at the top and bottom of the chart will appear if a threshold has been reached to provide secondary confirmation.
Notice that the Breakdown did not meet the threshold and a red triangle appeared only after the strength of the Breakout passed a threshold.
- Breakout Score Labels
When a Breakout Score moves through the 20, 30 or 40 threshold, small Score labels can be displayed in the chart.
This is a powerful strategy for timing the exit of a trade.
For example, in the image below, when the Breakout Score drops below -30 and you see the Red -30 label, you could stay in the trade until the Breakout Score reverses back through the same threshold indicated by the Green -30 label in the chart.
- Trend Channel
The channel consists of a center line with 2 parallel lines, above and below it, at the same distance.
Those lines will continually update and can be considered support and resistance.
- MACD / RSI Dominance
Two of the most widely utilised indicators in trading are MACD and RSI. The Green and Red circles in the image below shows the moment when both MACD and RSI become dominant.
For example, the Red circle below tells us that the MACD and RSI have both broken through their center line and are now negative together.
You can choose to show these circles when both the MACD and RSI become dominant or when either the MACD OR RSI become dominant.
- MACD / RSI Directional
Rather than waiting for both MACD and RSI to become dominant, you can also display circles whenever both MACD and RSI change direction together.
Notice the Green circle at the bottom of the chart below appeared much sooner when both MACD and RSI changed direction rather than within the image above which waited for the MACD and RSI to become dominant.
TIP: A great strategy is to use Domance to enter a trade and Directional to exit.
- MACD / RSI
Display the MACD and RSI strength and direction in the chart.
- Take Profit
Set the Take Profit sensitivity to display Take Profit flags in the chart. You could choose to exit a position in full or sell only a part of the position and take additional profit and the next Take Profit or on a Breakout to the opposite direction.
- Candle Strength Index (CSI)
Numbers above and below the candles show the underlying strength of each candle.
The range is -50 to +50.
Think of this as per candle Support and Resistance. In the image below, as the support increased from -4 to +17, then +19, the resistance on the same candles dropped from +5 to -2, then -7. This was reflected in the price moving to the up side.
- CSI Alerts
You can also set alerts based on the CSI values - small Red/Green diamonds will appear in the chart.