🔥 Pregnancy Line Diagram Teaching ⬇️ Confirming Pregnancy Line Entry 👇

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1. Pregnancy Line Confirmation
Imagine a range where the price has been trapped for a long time, suddenly the price starts to break out and closes above the range (red K-line). This phenomenon indicates that buyers have overcome sellers at this point, and the market "may" continue to push upwards and enter an upward trend. See the chart below 1⬇️
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But at this point, the question arises: how can we ensure that this breakthrough is valid and not a false breakout? It is very likely that the market will 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 retrace without breaking the previous resistance level to confirm that this breakout is genuine. However, many genuine breakouts do not retrace, and we often see the price go up directly, which may cause you to miss a very good buying opportunity. See the chart below 3⬇️
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So, if the market really doesn't pull back, I generally choose the second method, which is to use the engulfing line to confirm the validity of the breakout.
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🔥2. What is a pregnancy line?
The孕线, also known as the mother-child line, consists of two K lines: the first, larger line is the "mother line," and the second, smaller K line is the "child line," which is contained within the mother line. Key point: just compare the highest and lowest points; whether they are bodies or wicks does not matter. See the diagram below 4⬇️
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Uptrend: The left side of the chart shows that bulls did not continue to buy in the second phase, resulting in a small green candle; Downtrend: The right side of the chart shows that bears did not continue to sell in the second phase, resulting in a small red candle; The emergence of a child line immediately after the mother line indicates that both buyers and sellers in the market are hesitant, just like a rest area on a highway, where everyone chooses to take a break and adjust before hitting the road again. At this point, everyone should understand the concept of a pregnant line and the reasons for its occurrence, so let's use the pregnant line to help assess the authenticity of breakouts in a volatile market. See the image below 5⬇️
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If the price breaks upward out of the oscillation range and a pregnant line appears, it indicates that both buyers and sellers are beginning to hesitate, and the market is in a state of rest and adjustment. See the figure 6⬇️.
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At this time, 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 once again confirms the validity of this breakout from the consolidation range, and then the price continues to rise.
🔥 ====================== Third, let's go back 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 breakthrough. See the chart below 7⬇️
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After breaking through the resistance level, a pregnant line pattern forms, with the sub-line being a small doji indicating that neither the bulls nor the bears have won, and the price starts to hesitate.
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Then there are two situations: (1) the sellers are stronger, and the price is pushed back to the previous level, indicating that this time it was a false breakout.
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(2) The buyers are stronger, and the price continues to rise, indicating that this breakout is valid. Next, let's see how the price will develop in reality? As shown in Figure 7⬇️
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The market has chosen the second scenario, where the price continues to push upwards, so the breakout is valid and not a false breakout.
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🔥Fourth, how can we participate in this transaction?
Generally, Brother Liu will prioritize going long after a breakout, and observe when the price breaks the highest point of the mother line when a pregnant line appears. 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 it 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 previous untested resistance levels, or you can also use a trailing stop to protect your profits. Let me show you how the market is expected to move next: see the chart below 9👇
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🔥Did you learn it?
Please remember: the market is not something that can be predicted in advance by anyone. We can only make trading plans based on existing observations. If the market trends do not align with our trading plan, we should decisively give up. A very important trait of a professional trader is to maintain patience and only wait for trading opportunities that belong to them.
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