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 7 →2 weeks of consolidation around the 200 MA. As they reported steady, good earnings, you can get in at the breakout with a stop at the low of the bar. I wanted a wider stop because of the earnings factor. A couple of days later, it has a massive gap up. Since it had very little pullback from the open, and the gap is so big, you can sell your whole position as it goes up on the same day.
Strong sector (health tech), with a 2-week consolidation after an initial push with volume. Massive gap after rumors of an acquisition. Sold all of it because usually price stalls after a gap + news like that.
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.
Small note before the final trade: it had another entry a few days before, and you would've lost on it after it dropped on the second day. Hot sector, pharma during COVID days. Small gap into a breakout after several weeks of consolidation. Sell some after the third day and the rest after a few weeks, after it finally broke below the 10 MA.
Health tech was the best sector during COVID days. It consolidates for a couple of weeks after a big move and breaks out. Sell the first part a few days later and the rest after it closes below the 10 MA, since it's a fast moving stock.