Breakout and pullback technical setup
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Sean K
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Re: Breakout Pullback
So, albi, what's the point of the thread?
Are you going to continue on identifying these formations for us?
Are you just analysing this particular trade?
Or, is this about the stocks mentioned?
Cheers,
kennas
So, albi, what's the point of the thread?
Are you going to continue on identifying these formations for us?
Are you just analysing this particular trade?
Or, is this about the stocks mentioned?
Cheers,
kennas
Re: Breakout Pullback
Sorry Kennas ... always in a rush.
I will be posting, and hopefully others will too, charts that fit this criteria to monitor its worth as a trading setup.
It is extremely important to have solid position management which may be looked, specifically risk and reward ratios. The main focus will be on the setup.
A lot of traders look for the break, this setup will look for the break, then pull back for a safer entry when signs of strength return.
Enjoy,
Albi
Sorry Kennas ... always in a rush.
I will be posting, and hopefully others will too, charts that fit this criteria to monitor its worth as a trading setup.
It is extremely important to have solid position management which may be looked, specifically risk and reward ratios. The main focus will be on the setup.
A lot of traders look for the break, this setup will look for the break, then pull back for a safer entry when signs of strength return.
Enjoy,
Albi
chops_a_must
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Re: Breakout Pullback
The problem then becomes, "what sign of strength do you use to enter on?"
With a lot of breakouts, they wont return to the breakout point, they'll keep going. Others will retest and then move on again, offering a safe entry point, and others will come back straight through the breakout point and reverse.
With QGC there, you have no idea whether or not that gap will fill, so how do you play it? And has the gap itself taken most of the energy out of what would have been a very profitable run? So you may get a situation where the high soon after the gap may not be breached again, and it doesn't do too much after that, ala ORI and RIO.
The problem then becomes, "what sign of strength do you use to enter on?"
With a lot of breakouts, they wont return to the breakout point, they'll keep going. Others will retest and then move on again, offering a safe entry point, and others will come back straight through the breakout point and reverse.
With QGC there, you have no idea whether or not that gap will fill, so how do you play it? And has the gap itself taken most of the energy out of what would have been a very profitable run? So you may get a situation where the high soon after the gap may not be breached again, and it doesn't do too much after that, ala ORI and RIO.
Porper
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Re: Breakout Pullback
Looks very much like a Gann reversal set up?
Very tight stops are needed for this type of set up and let the winners run is essential because you have a lot of loosing trades.Buying on a outside or key reversal day etc would presumably be the trigger?
Not a bad idea though.
Looks very much like a Gann reversal set up?
Very tight stops are needed for this type of set up and let the winners run is essential because you have a lot of loosing trades.Buying on a outside or key reversal day etc would presumably be the trigger?
Not a bad idea though.
Could use this sort of set up to get your entries and stops, will probably get stopped out a bit though, but it will give you tight entries.
IMO you would probably be better off taking a half position on the breakout and the other half on the pullback, the good breakouts will run and you'll miss too much of the meat of the trade on the pullback.
Enter on a break of the previous days high, but only if the following days from the low (stop point) have higher highs and lows. I would also want to see some positive signs in the swing low bar (high close and reducing volume on the pullback)
IMO you would probably be better off taking a half position on the breakout and the other half on the pullback, the good breakouts will run and you'll miss too much of the meat of the trade on the pullback.
Enter on a break of the previous days high, but only if the following days from the low (stop point) have higher highs and lows. I would also want to see some positive signs in the swing low bar (high close and reducing volume on the pullback)
Attachments
I like to use the entry system used in the Traders Action Zone which is what you have closely explained. I also scan for the TAZ but love the breakout trade with a pullback as it gives the stock a solid support level to place your stop loss.
We may see CNT setup over the next couple of days, but other indicators are not looking so healthy
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MYO is a perfect example of a Darvas setups. Step was was looking for a massive expansion in volume followed by the formation of one of the boxes...which could be occurring now...
MYO is a good looking setup that shows a confluence of classic technical features.....
1. Good strong run up accompanied by big volume increase.
2. Nice orderly pullback accompanied by shrinking volume.
3. The pullback halted near the old resistance level of $1.59 that was established on Dec. 17 (old resistance has now become new support).
4. The pullback halted near the Fibonacci .236 retracement level.
5. The last bar on the chart (Friday 22nd) was a bullish day that closed in the top 25% of its range.
6. The last bar had more than 5 times the volume of the previous bar.
Chances are that stock will now run up far enough to produce a profitable trade. It's a case of risk management and money management from here on. A stop loss and a 'let your profit run' policy will mean the trade has limited loss potential and considerable profit potential.
The one thing this trade doesn't have going for it is that it's against the trend of the overall market, which is very definitely bearish on both daily and weekly charts.
1. Good strong run up accompanied by big volume increase.
2. Nice orderly pullback accompanied by shrinking volume.
3. The pullback halted near the old resistance level of $1.59 that was established on Dec. 17 (old resistance has now become new support).
4. The pullback halted near the Fibonacci .236 retracement level.
5. The last bar on the chart (Friday 22nd) was a bullish day that closed in the top 25% of its range.
6. The last bar had more than 5 times the volume of the previous bar.
Chances are that stock will now run up far enough to produce a profitable trade. It's a case of risk management and money management from here on. A stop loss and a 'let your profit run' policy will mean the trade has limited loss potential and considerable profit potential.
The one thing this trade doesn't have going for it is that it's against the trend of the overall market, which is very definitely bearish on both daily and weekly charts.
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I use somthing similar for my trading.
I just use a simple ma cross then wait for a pull back, stop loss set by multiple of ATR, exit on ma cross, there are a few other criteria to meet but that's basically it. all trading on the COB data.
The key I find with this style of trading is good money management as it is not uncommon (as someone has said already pointed out) to get a lot of losses in a row, before you get a good trend going, but in the long run i do find it profitable.
I just use a simple ma cross then wait for a pull back, stop loss set by multiple of ATR, exit on ma cross, there are a few other criteria to meet but that's basically it. all trading on the COB data.
The key I find with this style of trading is good money management as it is not uncommon (as someone has said already pointed out) to get a lot of losses in a row, before you get a good trend going, but in the long run i do find it profitable.
MYO looks like a breakout of a flag trade to me
Target being the height of the flag pole added to the level of where price broke above the upper line of the flag.
Do not exit at the target level, it may go higher
- as price approaches the target price
- tighten your stop each day (period) to say the low of the last bar (depending on your risk tolerance and the spread of the bar)
The above is the beauty of TA - so many options - trade your beliefs - its the exit that counts i.e whether or not you made a profit
Peter
Target being the height of the flag pole added to the level of where price broke above the upper line of the flag.
Do not exit at the target level, it may go higher
- as price approaches the target price
- tighten your stop each day (period) to say the low of the last bar (depending on your risk tolerance and the spread of the bar)
The above is the beauty of TA - so many options - trade your beliefs - its the exit that counts i.e whether or not you made a profit
Peter
Exit on cross of which MA's - which period and what type (simple MA, EMA)?
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tech/a
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Well I'm not so crazy about MYO.
Personally I think its weak.
Hi Tech,
By "The above is the beauty of TA", I meant that there is not just one interpretation of what type of trade it is - we are all individuals and as such we may determine a trade to be of a particular type, which almost certainly everyone will not agree on.
Who's right - who cares !
Peter
By "The above is the beauty of TA", I meant that there is not just one interpretation of what type of trade it is - we are all individuals and as such we may determine a trade to be of a particular type, which almost certainly everyone will not agree on.
Who's right - who cares !
Peter
chops_a_must
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Whoops, I have made 15% on my portfolio going long only the last month ...
The individual sector seems to be much more important...
Made less than you, but still a good result, in the same period going long materials and energy.
Hi Tech,
By "The above is the beauty of TA", I meant that there is not just one interpretation of what type of trade it is - we are all individuals and as such we may determine a trade to be of a particular type, which almost certainly everyone will not agree on.
Who's right - who cares !
Peter
That's right. Who's right and who's wrong doesn't matter. Maybe you're wrong on this trade and right on the next one.
Doesn't even matter if your trade wins or loses. What matters most is the size and number of your wins compared to the size and number of your losses.
Whoops, I have made 15% on my portfolio going long only the last month ...
Good for you. And you might have done even better if you'd shorted some of the plunging stocks or bought some put options
No matter what you made in the last month or any other month, it doesn't alter the fact that one of the most profit-enhancing tricks in trading is to trade with the trend of both the sector and the overall market
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I agree Chops, a few sectors have been doing very well, which has been contributing to the positive returns mentioned above. Got lucky with atleast 2 with heavy buyout attempts from other companies (I have finally conceeded to RSP buyout by Xstrata).
I trade 4 long term trending systems for stocks, one is a breakout system, and I have had no signal for over a year now, the other a linear regression system which generated its first signal this weekend, but also not generated a signal for over 8 months. The other two systems are pure momentum systems, which have picked up the mineral and energy stocks.
The entries would be considered pullbacks, however were not programmed specifically to be such. I have also recently got a position in MYO, however it is only two of ten (and a departure from minerals and energy), that is currently showing red atm.
I trade 4 long term trending systems for stocks, one is a breakout system, and I have had no signal for over a year now, the other a linear regression system which generated its first signal this weekend, but also not generated a signal for over 8 months. The other two systems are pure momentum systems, which have picked up the mineral and energy stocks.
The entries would be considered pullbacks, however were not programmed specifically to be such. I have also recently got a position in MYO, however it is only two of ten (and a departure from minerals and energy), that is currently showing red atm.
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