🔥 Pregnancy Line Diagram Teaching ⬇️ Confirming Pregnancy Line Entry 👇

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1. Confirmation of pregnancy line
Imagine a consolidation range where the price has been trapped for a long time, suddenly the price starts to break out and closes above the range (red candlestick), this phenomenon indicates that buyers have defeated sellers at this moment, and the market "may" continue to push upward and enter an uptrend. See below Figure 1⬇️
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But at this point, the question arises: how can we ensure that this breakthrough is valid and not a false breakout? There is a high possibility that the market will reverse and return to the consolidation range again, isn't it? See Figure 2⬇️
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So, one way is to wait for the price to pull back without breaking the previous high of the consolidation range to confirm that this breakout is genuine. However, many true breakouts do not pull back, and we often see the price rally directly, which can cause you to miss a very good long opportunity. See the chart below 3⬇️
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So, if the market really does not pull back, I usually choose the second method, which is to use the engulfing line to confirm the validity of the breakout.
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🔥2. What is a pregnant line?
The Pregnant Line, also known as the Mother and Child Line: it consists of two K-lines, the first larger one is the "Mother Line", and the second smaller K-line is the "Child Line", with the Child Line being contained within the Mother Line. Key point: just compare the highest and lowest points, whether it's the body or the wicks does not matter. See the diagram below 4⬇️
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Uptrend: The left side of the chart indicates that the bulls did not buy further in the second phase, so a small green candle appeared; Downtrend: The right side of the chart indicates that the bears did not sell further in the second stage, so a small red candle appeared; The appearance of a subline immediately after the bus indicates that buyers and sellers in the market are hesitant, just like the service area on the highway, and everyone chooses to rest and adjust before hitting the road. At this time, you should understand the pregnancy line pattern and the reasons for its appearance, so let's use the pregnancy line to help evaluate the authenticity of the volatile market breakout. Figure 5⬇️ below
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If the price breaks upwards out of the consolidation range and a bullish engulfing pattern appears, it indicates that buyers and sellers are beginning to hesitate, and the market is in a state of rest and adjustment. See the chart below 6⬇️
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At this time, if the price continues to rise, it indicates that the buyers are still in control, and the sellers' attempt to push the price back into the consolidation range has failed. Therefore, the breakout of the engulfing pattern once again confirms the validity of this breakout from the consolidation range, and subsequently, the price continues to rise.
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🎉 3. Let's go back to the actual chart and show you an example:
On the 15-minute chart of GBP/USD, the market failed to break through the resistance level three times, and then the price hit the resistance level for the fourth time and formed a breakout. See the chart below 7⬇️
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After breaking through the resistance level, a pregnant line pattern forms, with the sub-line being a small doji indicating that neither the bulls nor the bears have won, and the price begins to hesitate.
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Then there are two situations: (1) the seller is stronger, and the price is pushed back into the original platform again, indicating that this time it is a false breakthrough.
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(2) The buyers are stronger, and the price continues to rise, indicating that this breakout is valid.
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Next, let's take a look at how the price will develop in real situations?
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The market has chosen the second scenario, which is that prices continue to rise, therefore the breakout is valid and not a false breakout.
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🎉 Fourth, how can we participate in this transaction?
Generally, Liu Laoge will prioritize going long after a breakout, and when a bullish engulfing candlestick appears, he observes when the price breaks through the highest point of the mother line. After the breakout, I will intervene and place the stop-loss below the lowest point of the child line. Zooming in on the chart, everyone will see more clearly: see the image below 👇
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After entering the market, I plan to close half of my position when the profit-loss ratio is 2:1. The take profit point for the other half of the position can be set at a resistance level that hasn't been tested before, or you can also use a trailing stop to protect your profits. Let me show you how the market will move next: See the chart below 9👇
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🎉Have you learned it?
Please remember: the market is not something anyone can predict in advance. We only make trading plans based on existing observations. If the market trend does not align with our trading plan, we decisively abandon it. A crucial quality of a professional trader is to maintain patience and wait for trading opportunities that belong to them.
#sol# #pepe# #pi# #eth# #btc#