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Preview
The logic of breakouts has been present in financial markets for almost a century. In the 1930s, Richard Wyckoff observed how long periods of accumulation or distribution often ended with an explosion in prices: a moment when the market “decides” the direction and breaks the previous equilibrium. In the 1950s, Richard Donchian codified these insights by creating the famous Donchian Channels, one of the first mechanical trading systems based precisely on the breaking of highs and lows.
In the 1970s and 1980s, the concept became even more central thanks to figures such as Ed Seykota and, above all, the Turtle Traders, protagonists of one of the most famous experiments in the history of finance: they demonstrated how a simple strategy, based on following breakouts, could generate huge profits if applied with discipline. Their currency, commodity and interest rate futures trades became legendary, and are still studied today as an example of how risk management and patience can transform a seemingly simple model into a powerful method.
Since then, breakouts have become a constant reference point: from the booming stock markets of the 1990s to today's cryptocurrencies, breaks in key levels continue to attract the attention of traders because they often mark the beginning of large, directional movements. It's not just technical: it's market history, collective psychology and opportunities that repeat themselves over time.
In this in-depth analysis, I will show technical charts that will help you understand how a breakout strategy was developed. Various representations will be analysed, from bricks to classic time bars, using only Open, High, Low, Close (OHLC) values or the most well-known swings, in order to highlight how the model can be applied in different ways but always with a clear and consistent logic.
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