medium · Volume Price Analysis support-resistance
A stock breaks above a 4-week horizontal resistance level at $52.00 with a candle closing at $52.85. The volume on the breakout is 0.7x the 20-day average.
How should a practitioner manage this scenario?
- Place a buy-stop order at the high of the breakout candle to confirm momentum on the next attempt.
- Assume a successful test of supply has occurred and target the next resistance level.
- Enter a long position immediately, since any breakout above resistance starts the markup phase.
- Stand aside and wait for a possible reversal, as the move is likely a 'trap up' or fakeout.
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