Surge
Last updated
Last updated
Oftentimes when users see the market making a push in either direction, there is uncertainty if the move is overextended or if there is still time to enter into a trade and realize profit. The surge tool assists users in recognizing breakouts and breakdowns when they first occur, as well as the understanding the magnitude of the move once it has already taken place.
The surge tool has two outputs: the breakout or breakdown price level, and the percentage distance from that level. This helps users to know exactly what price has most recently done, which is indicative of its location within a trend.
A breakdown price is shown in red, while breakout prices are shown as green.
If price bounces off of the breakdown level and is above it, or if price breaks through its breakout level and is above it, the percentage will be positive, green, and above the level.
If price rejects down off of the breakout level and is below it, or if price sinks down past its breakdown level and is below it, the percentage will be negative, red, and below the level.
These are the four possible positions that price can be in:
Dumped past support level
Bounced off support level
Rejected off resistance level
Pushed past resistance level
These positions are all easily visualized by the Surge tool.
When price is below its breakdown level or above its breakout level, the most likely price action is continuation in this direction. This means that price has broken past its main barrier preventing continuation and is currently moving in the direction of the trend with respect to the timeframe selected. When price is within Range of its breakout or breakdown level, and is closer to its highs than its lows on the Levels and Zones tools, users can be confident that the market is not overextended and there is opportunity to enter a trade and catch a significant move early.
Optimize your risk management risk by recognizing that above/below the Surge level, continuation in the direction of the breakout or breakdown is likely when the trend is in that direction. Understanding this is key in not closing would-be profitable trades prematurely.
The shorter the timeframe Range that current price is within its Surge level with, the less of the move has happened and the more continuation is expected (given that the trend analysis tools show the trend is in the direction of the breakout/breakdown).
The larger the Surge percentage is with respect to the Range, the stronger (or more overextended) the breakout or breakdown is.
