This is a technical analysis that is around for well over half a century, and it had been profitable year in and year out ever since. This techniques keeps you in the market at all times, either in the short position or the long position. You do not flat the market with this.
Basically the channel breakout analysis is able to capture all the big moves in the market, so you might lose a little on some trades, but once the market conditions is right, you will capture the big moves and make alot from the rally.
For channel breakout, you can use it for any market, such as futures, stocks, forex etc. The basic priciple it follows is the 4 week rule. In simple words, first plot 2 lines, the 20 day high and the 20 day low on the chart; and if the market moves above the last 20 day high, take a long position and if the market moves below the 20 day low, take the short position. The stop loses are at either the 20 day high or 20 day low, for short position and long position respectively. So at all times, you are in the market in either a long or short position.
After some improvements and tweaks to the technique, the channel breakout now uses the 55 day high/low as one of the indicators. More on that in the next post.
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