breakout
Price clears a consolidation level and keeps going.
What defines it
Starting big move to the upside, followed by consolidation, at least about a week, or a gap above consolidation counts too. Keeping a watchlist of the biggest movers from the last 1, 3 and 6 months, and looking for the ones that are consolidating and ready to move. Keeping an eye on the current strong sectors based on the watchlist helps to find the best candidates.
What makes it work
Consolidation comes in many forms; the important thing is that the stock had a prior big move to start the uptrend. Compare the opening volume to the same time on previous days to see if we are getting better volume than normal. This strategy works best on strong uptrending markets, as it presents many more opportunities and even allows for mistakes and still being profitable. Stops are placed around latest low or last bar if it's a strong move or gap. Sell 1/3 or half of the position after 3 days and trail the rest based on the 10 MA if it's a fast moving ticker, or the 20 MA if it's a slower one; get out when it closes below the moving average.
Examples
all 3 →They're a software company, right now semiconductors are going down and tech services starting to move up so not the worst sector to go long. It gapped up right on top of the consolidation on good earnings. It had 2 big moves + consolidation before this trade. Moving on top of the 10 MA and consolidation on the 20 MA. It made a double bottom while consolidating. Sold half almost at the top and the rest after it closed below 20 MA after the big drop.
Any pharma stock during COVID days would go up on any news. It makes a doji at the 50 MA as it steadily goes up. You can get in as it breaks the previous 2 bars' high, sell the first part and exit flat, and sell the second part as it makes a gap on the way up to prevent a gap reversal.
Any pharma stock during COVID days would go up on any news. It had a good move up and consolidated around the 20 MA. Entry on the break of the consolidation, selling some after 3 days and the rest after breaking the 20 MA gives roughly 2x. But it did go more than 7 times the initial risk, with a stop on the low of day from the entry bar.