Originally posted at forexfactory on August 21, 2011:
Originally Posted by r4bb1t
we can predict significant support & resistance levels
but we can’t predict breakouts?
for example ‘buying the dip’ strategy implies that support will not be broken
how do they know that the support level will not be broken?
is there any method to calculate the probability of breakouts?
Yes, there is a methodology to calculate the probability of breakouts and sustainable breakouts.
You cannot do it every single time.
And you cannot get an accurate percentage. If more of falls into a range.
And that percentage probability can constantly change.
What is the methodology?
Instead of focusing on things like MACD + Stochastics + Fib Level + Chart Pattern + Price Pattern.
You go to something like this:
Some combination of Order Flow + Information Flow + News + Sentiment + Sensitivity + Global Macro
Using those tools/methodologites/ways of viewing the market and doing them correctly, while slaying your inner demons and misconceptions, will get you far closer to what the true probabilities are of a breakout and sustained breakout occurring.
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