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Tai Bai
@0xTaiBai
As the range narrows and volatility decreases, the market may enter a 'breakout mode,' where either an upward or downward breakout could occur—direction cannot be predetermined. Range contraction only indicates temporary balance between buyers and sellers, not guaranteeing a strong trend afterward. The first breakout might fail. After a large-bodied breakout candlestick, what matters most is whether there is follow-through in the same direction. If highs and lows keep contracting and candlesticks overlap heavily, avoid trading back and forth in the middle. Wait for a strong breakout with follow-through, or wait until a breakout is tested and held before considering entering in the trend direction. If price quickly reclaims the range, treat it as a failed breakout.
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