Breakout Setup Qullamaggie Style Intraday Analysis | 963 Breakouts Reviewed — Transcript

Full transcript

1. 0:00hi guys welcome to the channel in this  video I would like to share some results
2. 0:04interesting findings and a perspective following  an intraday analysis of the breakout setup here's
3. 0:11how the presentation is structured and the open  questions covered later first we'll look into a
4. 0:18bit of background and what data was used during  the study then where did the intraday study start
5. 0:24and what structural elements were identified next  we'll have a closer look to see in which of the
6. 0:3130 minute time frames are breakouts more likely to  happen how much volume is present in the breakout
7. 0:38area and is the volume giving any clues that a  breakout is about to happen what is the level
8. 0:45of correlation with pi and IVM what data suggests  about character and skills needed for the breakout
9. 0:52setup and the last one where can I get Edge  when trading breakouts I'm talking about data
10. 0:59it was collected during a deep dive which was  made on stocks and ADR is above three dollars
11. 1:05with daily volume more than 100K no buy attack  was included no ETFs and a timeline of six years
12. 1:13a total of 2578 Tigers were reviewed and 963  breakouts were identified more on that this
13. 1:24study and the Deep dive is available on the video  you see now on the screen on this YouTube channel
14. 1:31during that deep dive the full list of breakouts  were classified based on pattern and a closer
15. 1:38look at the pattern analysis was made this  time all those 963 breakouts were arranged
16. 1:46in a chronological order to the initial layer  of data which was collected during the first
17. 1:52Deep dive two extra layers of information were  added a side-by-side comparison with spy and
18. 1:59IBM on the daily chart to better understand what  the overall Market was doing while the breakout
19. 2:05was happening and an intraday 30 minutes chart to  be able to have a closer look at the price action
20. 2:12and volume during the consolidation period but  also during the breakout of the particular stock
21. 2:19let me give a bit of details on how to read this  chart so that you can easier track it and read it
22. 2:26later in the presentation what you'll see on the  top left is ticker and the 30 minutes time frame
23. 2:32the same information is displayed in the center  of the chart then there is a one blue line which
24. 2:38is located at an important resistance level in  the breakout area the line has a number at the
25. 2:45left which is the price in USD at that particular  level and then you see another line on top it's
26. 2:53more to understand what is the price action  between these two levels what you'll see also
27. 2:58is green arrow pointing at the 30 minute candle  this is the moment that is considered time frame
28. 3:06when the breakout starts to happen and at the  bottom of the Green Arrow there's an hour and
29. 3:13the exact date of that particular start of the  breakout you'll hear me a lot talking about 963
30. 3:21breakouts happening across all this presentation  and to manage your expectation but also to have
31. 3:27in mind this 963 breakouts are not happening  within one here this is the data collected or a
32. 3:34six years period and what you'll see on the screen  is the chart highlighting the number of breakouts
33. 3:40per year and because 2020 and 2021 were that crazy  what I consider as a more standard year and normal
34. 3:49usual year is to have around 114 breakouts I  will refer later in the presentation when I
35. 3:57will present some percentages to a standard year  have in mind that it's referring to a total of 114
36. 4:03breakouts per year now that we have the background  on data sorted here's the next question where did
37. 4:09the study started and what structural elements  were identified during the intraday chart analysis
38. 4:15this is possibly the most important part of the  presentation because these findings change so much
39. 4:21the way I understand and read the setup now here's  where the study started what I was surprised to
40. 4:27see during the first Deep dive was when studying  the pattern of the setup I saw that the app flat
41. 4:34flag and the channel have something in common and  they happen very very often so in 89 percent of
42. 4:42the cases the setup itself has this top particular  line which creates a resistance doesn't allow the
43. 4:49stock to move upwards and forces it to go into  a period of consolidation and then as soon as
44. 4:55that resistance is exhaustless breakout actually  happens I was highlighting in the previous video
45. 5:00find the level of resistance on the daily chart  and the intraday chart because it seemed to me
46. 5:05at that time also very important during the  intraday chart analysis one of the main goals
47. 5:11was to try to understand the price action and  volume and the Dynamics that creates with time
48. 5:18this line of resistance so this is what I looked  into I'll take a couple of examples so that you
49. 5:24see what I mean here's the daily chart and the  setup in on the daily and this is the intraday
50. 5:3030 minutes time frame so I was trying to find that  level of resistance and to me here it is and then
51. 5:38right away you can see the cat the 30 minute time  frame when the breakout started to happen here's
52. 5:45another example the breakout on The Daily and  then you see the line of resistance crate that
53. 5:52is creating with time and then the 30 minute  cancel where the breakout is happening also pay
54. 5:58attention how tight the move sideway is and then  also the volume in this case at the breakout area
55. 6:07uh let's go into another example so here it  is on the daily and then a bit of a choppier
56. 6:15sideway move but still there is an important  level of resistance and to me is this one and
57. 6:22then you see how the stock makes some attempts  in pre-market already and then at the open a
58. 6:30nice volume and a significant 30 minutes  move upwards and the breakout happening
59. 6:38so this line became from a line that it's usually  common for trading to highlight this support and
60. 6:46resistance levels this to this particular setup is  a structural element of the setup which is super
61. 6:53super important to highlight and find in the  process of trading the setup because it could
62. 7:00highlight the moment when the breakout is starting  to happen because this line happens at the front
63. 7:07of the setup and because it's such a confrontation  between Bulls and the Bears I thought that it has
64. 7:15a specific mechanics and I wanted to give it  a name as well so in the end I call it now the
65. 7:22front line even in this particular example like  now highlighting this front line you can see
66. 7:29also another element which I found almost always  is a 30 minute time frame and I was very lucky
67. 7:37to consider the 30 minute time frame because this  shows so well this particular moment of breakouts
68. 7:43highly advised to read the chart and the setups  in a 30 minute time frame for this particular
69. 7:48setup so then you can always see on the charts a  30 minute candle in which the breakout is actually
70. 7:57happening and this is also another interesting  finding and another point that I was happy to see
71. 8:04because in a sense finding this 30 minutes time  frame is the goal itself in trading the setup and
72. 8:13because of this particular 30 minutes time frame  it also can help Define the entry strategy the
73. 8:19stop level and so on so I was looking later in  all the 963 breakouts for the front line and for
74. 8:30this particular 30 minute candle and highlight  it with a green arrow and I wanted to give it
75. 8:36that 30 minute candle on them as well so everybody  gets a name so because the breakout happens it's
76. 8:43the liftoff of the breakout that particular  30 minute candle I gave the name of a liftoff
77. 8:49candle now there is a front line and the lift of  candle uh the lift of candle is the 30 minute time
78. 8:56frame in which the stock crosses the front line  and is perfect timing to enter the setup and it
79. 9:03contains in a sense the low the moment of lowest  risk of entry in the setup I'll get to it a bit
80. 9:10later in the presentation what I saw though when  trying to find this liftoff candle was that in
81. 9:17some situation the liftoff candle happens more at  the end of the day in the afternoon of the trading
82. 9:22day in some situation this candle happens more  like midday and in some situation is happening
83. 9:31at the beginning of the day there is a natural  question that wants to be answered is in which
84. 9:39of the 30 minutes time frames are breakouts more  likely to happen well if we look at the trading
85. 9:46Day within 30 minute time frames then what we  have is a total of 13 30 minute candles within
86. 9:52the trading hours and then one more candle was  added to signify the after hours and what I did
87. 9:59for all these 963 breakouts was to go and count  the exact lift liftoff candle when the breakout
88. 10:06started happening and here are the results a very  big amount of breakouts happening within the first
89. 10:15half an hour of the day 54.3 percent more exactly  and then 14.4 percent in the second half an hour
90. 10:22and then later in the day less and less breakouts  with almost no breakouts in the afternoon
91. 10:29if we take these percentages and apply them to a  standard year which contains 114 breakouts then
92. 10:37we get a total of 15 breakouts happening in the  second half of the day so almost not worth it
93. 10:44staying in the second half of the day for that  setup and then so much Focus has to be allocated
94. 10:52to the first part of the day I was very happy to  do this exercise because it confirms so much of
95. 10:58the trading strategy and where the entry should  be and where the focus should be it also confirms
96. 11:05how well Christian nailed the setup and totally  legit and how correctly he is trading it so here
97. 11:12are a couple of conclusions 69 of breakouts  happen within the first hour of the trading
98. 11:17day 86 before 12 am and then another type of  conclusion that I made when looking through
99. 11:26all these charts was there is time even when  reading the chart and the setup within the 30
100. 11:33minute time frame I could spot the entry the  front line where the stop loss should be so
101. 11:41no need to be particularly like running with the  one minute or five minutes chart because it can
102. 11:48create some extra fomo to secure an entry Edge  there are at least 30 minutes available no fomo
103. 11:56then the next question of the study was how  much volume is present in the breakout area
104. 12:01the main goal of this part of the study was  to see if the volume indicator is giving any
105. 12:07clues or signs that a breakout is about to  happen and now knowing about the liftoff
106. 12:12candle and the front line I was paying way more  attention to understand the volume behavior in
107. 12:17that particular area both for the daily chart but  also intraday as a result I had two sub questions
108. 12:24is there a high volume during the breakout day  the answer is Broad and subjective so yes or no
109. 12:33I still wanted to do it anyway to see where the  data was pointing so I was looking at the daily
110. 12:38chart for this question in this highlighted area  and comparing the volume bars of the breakout day
111. 12:43compared to what happened before in this case it  will be considered yes there is an unusual daily
112. 12:48volume yes there is an unusual daily volume  here as well we look at the volume yes there
113. 12:54is unusually volume on the day of the breakouts  and here will be an example when now the breakout
114. 13:00is happening there is a breakout day but based on  volume we could not see that we are going through
115. 13:06the breakout day so here is the question and after  looking at 963 breakouts this is the results in
116. 13:1567 percent of the cases which is a good news we  have a higher volume than usual in the breakout
117. 13:22day that means this can be detectable with some  scanners that could possibly we could possibly
118. 13:28have the breakout day and then no in 33 percent of  the cases which is also a big amount of cases when
119. 13:36the breakouts are kind of invisible you cannot see  based on volume that the breakout is happening and
120. 13:42pay more attention to this part of the data so 33  of breakouts are not detectable when scanning for
121. 13:49the increase in relative volume for this breakouts  the price action Remains the only indicator that
122. 13:54could highlight that the breakout is about to  happen breakouts require price alerts then I
123. 14:00looked at the intraday chart so is there a high  volume in the liftoff candle here are a couple of
124. 14:05examples so in this case yes there is an unusually  high volume during the Breakout yes in this case
125. 14:13as well and here is an example when nope there is  not so much unusual volume I couldn't spot based
126. 14:21on the volume that something unusual is about to  happen on the candle itself the price of action
127. 14:27was Major but on the volume it's almost invisible  so here's another example with that type of
128. 14:34regular standard volume and the breakout happening  is there high volume in the liftoff candle after
129. 14:40reviewing 963 breakouts yes in 52 percent of  the cases and no in 48 of cases again trying
130. 14:50to point on the invisible one so 48 of breakouts  will not be detectable with the volume indicator
131. 14:57in the liftoff candle that was unexpected to  seem and to find so many of them which do not
132. 15:05have this volume force behind and it's a kind of  perception about the breakout that it would to
133. 15:12have this lift off and move upwards you need a big  volume to also go through that line of resistance
134. 15:19but it's actually not that true you don't need  that much volume once the sellers are exhausted
135. 15:26even a small amount of volume will create that  price action and initiate the breakouts and that
136. 15:33will bring me again to this point break Scouts  require a system of price alerts at the front
137. 15:39line meaning those lines where you get alerted  when the price is crossing that particular line
138. 15:46this could help to avoid situations when you  just miss the breakout during the trading days
139. 15:53then the review of the intraday data in the  breakout period show in some situation the
140. 15:58presence of random high volume candles most likely  big institutions are building position here's what
141. 16:05I mean this is an example when volume is having a  regular good repartition day by day but you also
142. 16:14have these situations when you see unusually high  candles during the breakout period not exactly
143. 16:22during the lift of candle but before or after  the breakout happens here is another situation
144. 16:30when those unusually high 30 minutes volume bars  are present A lot of times at the end of the day
145. 16:39then here is another one the bars after the  breakout happens here is another example with
146. 16:45a significant volume and more of those high volume  bars after the breakout I try to give them a name
147. 16:53there is something to study here I call them the  volume towers and overall it's the most likely
148. 16:59big institutions are building a position which is  good to see and I took them as good signs when I
149. 17:06was seeing in the breakouts area this kind of  unusually high volume elements at the end of
150. 17:12the day or like during the breakout phase it's a  sign and it's a good indicator that most likely a
151. 17:18breakout is about to happen a small wrap up on the  information we discussed so far so we talked about
152. 17:25the front line the 30 minute liftoff candle and  the volume Towers I highly advise you to use your
153. 17:32charting tools and confirm the structure elements  of the setup give them cooler names but I hope you
154. 17:37found it useful and insightful here's the next  question was the level of correlation with spy
155. 17:43and IVM after the breakout actually happened there  were three answers assigned for this question the
156. 17:50market is going upside the market is in a sideway  Trend or the market is in a downside Trend to
157. 17:58answer this question we will use this layer of  data a bit of details on how to read the chart
158. 18:05the Green Arrow highlights the breakout day which  is the same on spy daily and IVM daily the Green
159. 18:14Arrow always points at the day when the breakouts  happened and you see at the bottom the date where
160. 18:21the Green Arrow is pointing here the market is  going in the upside Trend so I considered the
161. 18:28breakout happening in the upside trend here the  breakout is happening but the markets within the
162. 18:35first days of the breakout and closer to the  breakout day the more important are these days
163. 18:40so in within the first days it was a sideway move  even if the breakout is doing a sharp move upwards
164. 18:48same on IBM so these situations was considered  a sideway market and then here's the breakout
165. 18:56happening but the market overall is going into a  correction this type of situation was considered
166. 19:03a downside market and here are the results  in 61.9 percent when breakouts happened the
167. 19:11market was in an upside Trend 29.8 percent of  the cases spy was in a sideways action and 8.3
168. 19:19percent it was in a downside similar data after  reviewing and summarizing the data for IVM one of
169. 19:27the conclusions that was highlighted also while  doing the breakouts map and coming again through
170. 19:34this data as well is that breakouts happen most  of the time in sideway or upside market trends
171. 19:42to put this question in Reverse form if you  trade in a downtrend market the probability
172. 19:50of a breakout to work is eight percent the data  collected during the Deep dive is available on
173. 19:57the link in the description so you'll find 963  breakout slides and then for all these slides
174. 20:03there is one more slide with the breakouts pi  and IBM correlation and the 948 intraday 30
175. 20:10minute charts in addition there I found super  useful this exercise to add the front line and
176. 20:17the identify the liftoff candle that's why there  are 100 stickers which have no lines and arrows on
177. 20:26the chart so that you could do the exercise  and internalize the knowledge for yourself
178. 20:32all available on the link on the description  next question what data suggests about the
179. 20:37character and skills needed for the breakout setup  a small disclaimer everybody can trade this setup
180. 20:43it's nothing unusual or something you should be  worried about but I saw it suggested by the data
181. 20:50and I said it will be fun to highlight uh here it  is first one patience patience because the setup
182. 20:58is going through a consolidation area so you'll  have to be patient and wait for it to approach
183. 21:04the front line so that's in one situation and then  sometimes patience after the breakout happen it
184. 21:11doesn't go upwards that fast so you really need  to sit on hands and be patient and wait for the
185. 21:17breakout to unfold next data suggests you have to  be grounded decisive sharp and quick where I saw
186. 21:24this is at the moment the setup and the sticker  is approaching the resistance line the front line
187. 21:32then you have 30 minutes to take a decision enter  the stock and decide the amount of stock you have
188. 21:40to buy and enter the stock so you have to be  quite sharp and decisive within the 30 minutes
189. 21:47time frame here is another example where the stock  was sideways and then when it happened requires a
190. 21:55very fast and decisive action from the trader  and the last one a sense of don't give up and
191. 22:04that's the fun and painful part to watch it on the  data but harder when you suffer it while you trade
192. 22:10it what you see is the stock doing the breakout  going through the breakout and then coming back
193. 22:17before below the front line which in most of the  cases this is where the stop level is and that
194. 22:24means it will take me out of the trade which can  be frustrating and then couple of half an hour
195. 22:30candles later it breaks out and never come back  so seeing this could be super frustrating another
196. 22:36example sideways consolidation then an initiation  of a breakout then comes back takes you out Waits
197. 22:45two days and then going upwards and then doing  another artifact sort of here so a lot of like
198. 22:51this idea of not giving up and if the stock is  trading around the front line still sticking to
199. 22:59it could be an interesting thing to do and then  a last example I think it's the liftoff candle
200. 23:07then coming back taking you out and then next day  breaking out uh what a frustration here looking
201. 23:14into the last question of this presentation  where can I get Edge when trading breakouts
202. 23:21take this slide as a perspective from my sides  or an opinion and here's how I will answer to
203. 23:28this question so breakout kalamagi style Edge is  in recognizing the setup the first leg sideway
204. 23:35consolidation type price action 10ma above 20 the  front line ADR and so on all these elements should
205. 23:41be there and I assume an unexperienced Trader will  not recognize and see these elements correctly so
206. 23:49big edge of the setup will be lost so that's the  first element the second and in a sense the goal
207. 23:58of the setup is to try to enter at the lift of  candle this is by far the the cool part of the
208. 24:06challenge when trading the setup is to enter  in that 30 minute time frame when the stock
209. 24:12is crossing the front line and when the breakout  confirmation is there but also a stop at the low
210. 24:21of the 30 minute candle makes so much sense it's  almost no risk in such a trade third element is
211. 24:29the market context because the breakouts happen in  the sideway or bullish Market environment reading
212. 24:36the ETFs the sectors momentum all these elements  that will suggest momentum in the market can give
213. 24:44you big Edge when trading the setup and the last  one that I will put it like General is trading
214. 24:52character and skills being patient grounded sharp  when needed decisive and that sense of not giving
215. 24:59up when you are taking out sticking around to see  if maybe the stock is still having that breakout
216. 25:06action could be an idea so this will this is  summarized into this trading character and
217. 25:12skills element another attempt I'll try to do is  to give a breakout kalamagi style setup overview
218. 25:20it's still work in progress but here's how I will  Define the setup in a bigger picture and stepping
219. 25:26back so we have the setup and what we have is at  three to seven days formation of the first leg in
220. 25:34most of the cases the first leg has 12 percent  momentum or higher the setup encounters a level
221. 25:42of resistance and goes into a consolidation area  with 10 days above 20 and step by step approaching
222. 25:52that resistance level were how I call it now the  front line and goes through the breakout in most
223. 25:59of the cases the sideway move happens between 7 to  12 Days the breakout happens in uh upside bullish
224. 26:07environment or sideways and the breakout candle  is in most of the time at the beginning of the day
225. 26:17then they set up breakouts with 48 of the setups  will not show an unusual volume in the liftoff
226. 26:27candle and 33 percent of breakouts will not show  an unusual volume on the breakout day however the
227. 26:34rest will have a significantly higher volume than  usual the breakouts is happening and in 76 percent
228. 26:43of the cases breakouts will do at least 16 percent  move upwards and if you will continue and follow
229. 26:53the breakout with the stop below 10-day moving  average it generates less than 16 percent of
230. 27:00profit in 60 percent of the breakout situations  don't take this element as an advice but that's
231. 27:06something that was measured in the previous dive  yes closer and closer to better understand their
232. 27:16breakout setup and what a beautiful interesting  structural setup of the market thanks to Christian
233. 27:23as well to sharing the setup with everyone here  is what I'll try to do next there is a gap in the
234. 27:30data uh I have so far so uh how many setups fail  to break out and how are the breakouts that fail
235. 27:39for now there is the data that was collected  for that six years period and for each year I
236. 27:46know how many happened but I don't know how many  failed to break out and that's something I'll try
237. 27:52to look into so that will be the next question  coming soon so make sure to subscribe and like
238. 27:59the video if you liked it so far so it will be  about the breakout setup failure rate analysis
239. 28:05what can be learned from failures please give  it a like if you like the video subscribe to the
240. 28:12channel follow and say hi to me on Twitter and uh  thanks a million for watching best of luck peace