📌 A Practical Guide to Breakout Trading Using Solar Wave & Smart Retracement Channel
1. Understanding Trends & Breakouts
Trend is the directional movement of price it can go up, down, or sideways. In technical analysis, there are 3 main types of trend:
Uptrend: Price forms higher highs and higher lows.
Downtrend: Price forms lower highs and lower lows.
Sideways (ranging): Price moves within a narrow range, with no clear direction.
Correctly identifying the trend helps traders:
✅ Trade in the right direction
✅ Avoid counter-trend setups that carry higher risk
Breakout refers to price moving beyond a well-defined structure such as a support/resistance level or consolidation range. There are 2 common types of breakout:
Continuation breakout:
➤ Price consolidates within a trend, then breaks out to continue in the same direction.
➤ This is generally more reliable and easier to trade.
Reversal breakout:
➤ Price breaks out of a previous structure and starts a new trend in the opposite direction.
➤ Higher reward but also riskier if not properly confirmed.
2. Introducing the Tools: Solar Wave & Smart Retracement Channel
Solar Wave
Purpose: Identify trend direction, strength
Trend Vector – measures both trend direction and strength:
Trailing Stop defines trend direction and works as a dynamic stop. Trend changes when price crosses this plot
📉 Smart Retracement Channel
Purpose: Identify real-time breakout levels based on price wave structure.
How it works:
Real world use case:
3. How to Combine the Two Indicators
Core Principle:
"Only trade breakouts that align with the trend identified by Solar Wave.
If Solar Wave and Smart Retracement Channel give conflicting signals — skip the trade."
Trading Checklist
Use Solar Wave to determine the current trend:
- If uptrend → only look for Buy setups
- If downtrend → only look for Sell setups
Wait for a valid breakout from Smart Retracement Channel:
Skip the trade if signals are not aligned:
4. Summary
The combination of Solar Wave + Smart Retracement Channel offers a structured and logic driven approach to breakout trading:
✅ Confirm trend direction and strength objectively
✅ Avoid fakeouts and poorly timed entries
✅ Identify precise breakout levels supported by wave structure
✅ Works well for both breakout and pullback strategies
Would you like to see this strategy in live action?
Drop a comment below and let us know!
Thanks for watching and for your support. 🏆
You can refer to the Smart Retracement Channel indicator here: Smart Retracement Channel Indicator For NinjaTrader 8 - ninZa.co
You can refer to the Solar Wave indicator here: Solar Wave Indicator For NinjaTrader 8 - ninZa.co
Link video here:
