🔥 Pregnancy line diagram teaching ⬇️ Confirm pregnancy line entry 👇

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1. Confirmation of Pregnancy Line
Imagine an oscillating range, where the price has been trapped in the range for a long time, and suddenly the price starts to break out and close above the range (red candlestick), this phenomenon indicates that buyers have outwitted sellers at this time, and the market "may" continue to push upwards and get out of the uptrend. Figure 1⬇️ below
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But then the question arises: how can we ensure that this breakthrough is valid and not a false breakout? The market is very likely to reverse and return to the consolidation range, isn't it? See the chart below 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 zone to confirm that this breakout is genuine. However, many true breakouts do not pull back, and we often see prices directly surge, 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 generally choose the second method, which is to use a pregnant 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, consists of two K lines: the larger one is the "Mother Line," and the smaller K line is the "Child Line," which is contained within the Mother Line. Key: Just compare the highest point and the lowest point; it doesn't matter whether it's the body or the wick. See the image below 4⬇️
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Uptrend: The left chart shows that bulls no longer continue to buy in the second phase, resulting in a small green candle; Downtrend: The right chart indicates that bears no longer continue to sell in the second phase, resulting in a small red candle; The appearance of the child line immediately after the mother line indicates that both buyers and sellers in the market are hesitant, just like a service area on a highway, where everyone chooses to rest and adjust before continuing their journey. At this point, everyone should understand the reason for the pregnant line pattern and its emergence, so let’s use the pregnant line to help evaluate the authenticity of breakouts in a volatile market. See the following image 5⬇️
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If the price breaks upward from the consolidation range and a harami pattern appears, it indicates that both buyers and sellers are beginning to hesitate, and the market is in a state of rest and adjustment. See Figure 6⬇️
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At this moment, if the price continues to rise, it indicates that the buyers continue to dominate, while the sellers' attempt to push the price back into the consolidation range has failed. Therefore, the breakout of the bullish engulfing pattern further confirms the validity of this breakout from the consolidation range, and subsequently, the price continues to rise.
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🔥3. Let’s return to the real 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 harami pattern forms, with the small cross star indicating that neither the bulls nor the bears have won, and the price begins to hesitate.
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Then there are two scenarios: (1) the seller is stronger, and the price is pushed back to the original level, indicating that this was a false breakout.
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(2) The buyer is stronger, and the price continues to rise, indicating that this breakout is valid. Next, let's look at how the price will develop in the real situation? See Figure 7 ⬇️
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The market has chosen the second scenario, which is that prices continue to rise, so the breakout is valid and not a false breakout.
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🔥Four, how can we participate in this transaction?
In general, Brother Liu will prioritize going long after a breakout, and when a bullish harami appears, he observes when the price breaks above 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. By enlarging the chart, everyone will see more clearly: see the image below 8👇
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After entering the market, I plan to close half of my position when the risk-reward ratio is 2:1, and the take-profit point for the other half can be set at previously untested resistance levels, 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 cannot be predicted by anyone in advance. We can only make trading plans based on existing observations. If the market trend does not align with our trading plan, we should decisively abandon it. One of the most important traits of a professional trader is to maintain patience and wait for their own trading opportunities.
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