This trading strategy captures a stock that is about to explode higher after a slight pause in its rise. The difficult part of this trading strategy is the ability of the trader to spot the pattern. Sometimes it is not so easy to spot it but with a little practice and study of previous past winners, one will be able to spot these opportunities quite often.
First of all I hope that you will learn to spot the triangle. It is not difficult but with practice you can.
In the chart above we can see how COP set up a triangle. Previously there was a rapid rise. So this triangle is a continuation of the stock's rapid rise.
The trader can buy the breakout and put a stop loss below the pattern or the higher pivot in the lower trend line. This depends on how aggressive you are. A good setup will rarely drop below the tip of the triangle.
The good thing about this pattern is there is a price target. Take the height of the previous rise ( we call it the pole) and project it upwards from the tip of the triangle. As you can see, the stock more than met its target.
A good tip I can give you is that you can use the 60 min chart to help you spot a triangle better. In the chart above, you can see that COP formed a 60 min triangle as well. A trader can buy the breakout of this stock.
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