This trading strategy takes advantage of an orderly correction to the rising 20 day moving average. The keyword here is "orderly" correction. If the correction was messy then it cannot be a setup.
With an orderly correction, you can easily draw a downtrend line to connect the highs of the correction.
In order to find a setup we need to find a stock that is in an uptrend.
In the chart above we can see how KEYS was in an uptrend. The stock corrected orderly to the rising 20 MA and then it broke out higher. A trader could buy the breakout above the downtrend line and put a stop loss below the low of the correction.
If you go down to the 60 min chart, you can usually draw a better down trend line.
The 60 min chart will help you to spot the break of the downtrend line better.
It takes some practice to draw a correct trend line. But with time, you can draw a nice one.
Dec 03, 21 09:52 AM
Here are a list of stocks that have broke out or about to break out. Breakout stocks can often give us a good reward to risk ratio.
Dec 03, 21 07:22 AM
Here are a list of stocks that are at their 50 MA and 200 MA. The 50 day moving average and 200 day moving average can be a support area where stocks bounce off
Dec 03, 21 05:59 AM
How will the US stock market work in December? Will there be a rebound? Will the stock market continue to go higher?
Dec 01, 21 09:24 AM
Apple is one of those stocks that we should look at almost every day. The reasons is because it is a component of the Dow Jones, the S&P 500 and the Nasdaq.
Nov 30, 21 09:11 AM
Are the markets going to continue to move higher? Is it in an uptrend or downtrend and where are the support and resistance?