|In the accompanying chart, Coca-Cola Co. (KO) showed evidence that it was breaking out of the trading range that it had been in since mid-March. The price gapped up at the open and closed at the high of its trading range. Note the increase in trading volume. |
There are occasions when such a scenario may prove to be a false breakout, and you can see that a similar breakout occurred on 4/4/00 but quickly retreated back into its trading range.
|In order to determine if the activity on 5/9/00 is the beginning of a breakout, you'll have to watch the activity on the following day. On 5/10/00 prices did continue their upward movement and stayed above the trading range accompanied by higher-than-average volume. Additionally, the faster moving average had crossed above the slower moving average, another confirming signal.|
|Graphic provided by: CQG Net.|
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