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72 CHAPTER 1 One-two-three Breakouts of a Trading Range The following is a technique that seems to fit in better in this part of the manual than in any other. It is sort of a combination of some of the things that have been covered so far. It involves a 1-2-3 low or a t-ll-ill high that comes within a trading range, but ONLY IF THE BREAKOUT COMES ON OR AFTER 21-29 BARS ARE SHOWING WITHIN THE CONGESTION AREA. I sometimes fudge byalBar. This technique allows me to get a jump on the breakout of a trading range before prices actually break out of the congestion. I definitely do not to use oscillators with this technique. The oscillator can be dangerous to use in congestion areas. There are far too many false signals to contend with. To use an oscillator here would be trying to get a double jump on the breakout by prices. Ill define the technique here, and then show some examples. If, after 21-29 price bars have occurred there forms a new 1-2-3 low or a new J-ll-III high within the congestion area, it is permissible to trade the breakout of the one-two-three, just as you would trade any one-two-three breakout discussed in Part II of the Manual. Now let me show some examples. As I present the various charts, I will explain any detail to help clarify the intricacies involved.
3752a 360SB 34668 38 31880 30370 28940 27510 26079 24650 i - (2) III II (1) Figure 1 iVlarch Corn has been in a trading range for quite sonne time, and in this figure it appears to be making either a 1-2-3 low or a l-ll-ll! high. Since I dont want to second guess this market, i will place a Buy Stop just above the high and a Sell Stop at the breakout of the envelope, since the low is so near to the bottom of the envelope anyhow. Notice that Corn is also in a trending channel. I will be discussing the breakout of the trending channel in another section of this part of the Manual.
 Figure 2 The British Pound had made a major bottom and traded within a rather large trading range for a number of weeks. Trading the breakout of the envelope, while stiil a good trade, could have been improved upon by trading the breakout of the number 2 point as shown.
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