A bulge, otherwise known as a breakout line, denotes a breakout trend line representing one standard deviation above the average moving average. A breakout line is usually the top line of Bollinger Bands, when plotting Bollinger bands, in an otherwise normally plotted price chart. The reason for this is that breakouts often represent price patterns that are not readily apparent as a simple upward or downward trend.
A breakout typically signifies that there is a high probability that the stock market chart will begin to trend upwards and then back down to a more normal level. The more bullish the breakout line is, the greater the probability of an upward move on the stock market chart.
Bulges occur most frequently in a stock's history and typically occur at times when a low probability high risk trades occur. These include times when there is a large news event or economic event which raises the share price or when an investor realizes he or she could make a significant profit by buying large blocks of shares and holding them until the price begins to rebound.
Traders who trade in large blocks of shares tend to be considered high probability traders
This is because they are looking for long term gains that could be made by taking small positions in these types of stock. They don't usually have to worry about high volatility as they will be able to cover their short positions and earn substantial profits. As a result, they don't take many positions.
A high probability trader is much more likely to go on long term trend than an average trader, who is more likely to go on short term trends and be on and off the trend more frequently over time. Since a bulge is one of the most bullish stock market patterns there is, it is often an indicator that there is a large share price increase on the horizon.
The size of the long-term trend can be quite large and is often accompanied by a strong upward move. This means that a large number of people can expect a large share price rise in the near future. As an investor, you can take advantage of this by placing your buy and sell orders for a large number of shares when the price begins to rise and wait until the trend has fully recovered before you sell. and exit your position.
Another characteristic of a bulge is that it does not normally fade quickly. Even if you are taking a large position and it is already making its way up in the long term trend, there is usually some level of resistance in place to stop the decline.
These bulging patterns typically come from the price moving up quickly and then either remaining the same or trending up to the next level. In other words, the price is rising rapidly for a period of time but then is pulled back into a holding pattern. The price may remain in this holding pattern for some time and then break down to lower resistance, again causing the price to continue to rise.
As long as this type of pattern continues, you should be able to ride the trend. There is always the risk of a reversal, of course, but that will happen only if there are no support in place and the price has broken the trend.
This kind of pattern is especially bullish for high probability traders since they often see some gains within the first few weeks of the pattern. If the price continues to rise at a steady pace, it is often considered a long term trend. and therefore many traders are ready to sell before the pattern ends.
Although the price usually breaks out to the upside in the middle of the trend, it is important to remember that it is still in a holding pattern and should not be taken as an indication that the holding pattern is about to end. It is also important to watch for a reversal as this can indicate that a reversal could occur. even if the pattern was broken. It is also important to be aware that this is not a good time to be investing in high-risk, high volume stocks.
For a successful trader, the market always has cycles. But the main thing to keep in mind is to try to understand what cycle a given pattern represents, then trade accordingly. The pattern may not last for very long and it may even reverse. So if you are interested in buying or selling a large volume of stocks, the best time to do so is during the early hours of the morning.