This trading strategy captures a stock that is about to explode higher after a slight pause in its rise. However there must be a previous high that exist.
GPK above shows how the stock traded sideways for some time. The stock was trading sideways at a previous high. You can draw an "inverted V" shape on the previous high.
The trader can buy the breakout above the consolidation and put a stop loss below the consolidation. Once the trader reaches a 1:1 Risk:Reward ratio he or she can sell 1/2 or 1/3. What this means is if you risk $100 in the trade and your profit reaches $100, take 1/3 or 1/2 of it off the table and ride the others higher.
The chart above is the 60 min chart of GPK. When you switch to the 60 min chart, you can see how the stock breaks out of the trading channel. You can also use the 60 min 50 MA as a trailing stop loss. Sell the entire position if it drops below the 50 MA.
Below are more examples of this trading strategy. Take a look at them and study them.
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?