This chart compares the relationship between trends and patterns, focusing on whether the breakout direction is consistent with the overall trend. The first segment is an upward breakout after a downward consolidation, which is a reversal breakout. Although the potential is considerable, the success rate requires more confirmation, such as increased volume or a rebound from key support. The second segment is an upward breakout within an uptrend, where the direction aligns with the trend, offering the best continuity, and is the pattern most favored by trend traders. The third segment is a downward breakout after an uptrend, indicating a phase of the trend has ended, necessitating consideration of profit-taking or a reversal. The fourth segment is a false breakout during a high-level consolidation, where it appears to break out on the surface, but lacks continuation. This type of pattern should be especially watched for at high levels. The fifth segment is an upward breakout after a small consolidation during an uptrend, with shallow pullbacks and a compact pattern, indicating a higher probability of continued upward movement. Lastly, and most importantly, when judging whether a breakout is worth participating in, one should not only look at the pattern but also consider the trend direction, breakout position, volume changes, and market environment to form a multi-dimensional confirmation.
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