Momentum Breakout

Overview

The Momentum Breakout strategy detects genuine breakouts from consolidation zones and rides the subsequent momentum move. Unlike simple breakout strategies that suffer from fake-outs, it requires multiple confirmations before entering.

Category: Diversified — Trend-Following Timeframe: Single (5m) Best Regime: Trending Typical Hold Time: 1-6 hours

Entry Logic

For LONG Breakout:

• Price breaks above a recent resistance level

• ADX confirms strong trend (above 25)

• Volume expansion confirms participation (above 1.3× average)

• EMA alignment supports bullish direction (20 > 50 > 200)

• Order flow imbalance favors buyers

• Bollinger Band expansion indicates momentum

• OI × Price divergence shows CONFIRM_BULL (new money entering)

Key Differentiator

The strategy uses the OI × Price analysis to distinguish genuine breakouts (new positions being opened = OI rising with price) from short squeezes (OI falling with price rising = shorts covering, not a real trend). This single distinction prevents many false entries.

Session-Aware TP/SL

• Strong Trend (ADX > 35): TP ×1.35 — let profits run in strong momentum

• Moderate Trend (ADX 25-35): TP ×1.15 — standard extension

• Weak Trend (ADX < 20): Strategy typically skips — not enough momentum