Potential & Breakout trading--Technical tips and tricks

[white_crane]

Hopefully this is a better example (than UXC). It's SDM and it broke out yesterday on a 2 year high.

 

[Boggo]

I just thought I would put this up for discussion/analysis.

The chart is CAH.
The software has identified it as a potential ABC correction, the C=A which is preferable and the overall retracement is in the zone.

Based on the pattern to this point the software has projected a minimum target of 2.31 with a R/R of 3 if it is reached (out of sight further up the chart is a typical projection of $2.55).

The second last volume bar (highlighted) has been identified as being of significance (VSA influence) as indicated by turning red.

There are a number of positive signs on this chart but there is the underlying influence of the market correcting the sector containing a lot of these stocks over the last few days which will likely continue into Monday.

(click to expand)

 

[tech/a]

I just thought I would put this up for discussion/analysis.

The chart is CAH.
The software has identified it as a potential ABC correction, the C=A which is preferable and the overall retracement is in the zone.

Based on the pattern to this point the software has projected a minimum target of 2.31 with a R/R of 3 if it is reached (out of sight further up the chart is a typical projection of $2.55).

The second last volume bar (highlighted) has been identified as being of significance (VSA influence) as indicated by turning red.

There are a number of positive signs on this chart but there is the underlying influence of the market correcting the sector containing a lot of these stocks over the last few days which will likely continue into Monday.

(click to expand)

Happy to discuss it but its not a breakout perhaps we should have a "Technical opinion on charts" thread

 

[explod]

Happy to discuss it but its not a breakout perhaps we should have a "Technical opinion on charts" thread

Agree, but to include general chart analysis would be good in my view.

Always appreciate your instructive input Tech.

 

[$20shoes]

COE - a lot going on volume wise.

I am labelling the correction from point 4 onwards as a broadening formation. Another week or so of this type of correction might see me lose interest in this one. For now, I'll watch for a breakout in the next few days trading. Another rejection at 46.5 should be interpreted as a sign of weakness.

I have shaded in some supply/buy zones that seem important.
The blue rectangle extending from A continues to throw its shadow.
Heavy volume on a wide ranging day at "0" became a resistance point at "B". (Anecdotally, you often see the first test back into the large volume range fail, because buyers locked in on the losing side are often grateful to exit at break even once the price action comes back. You often need a gap up to see these latent suppliers withdraw at the break even price range). The failure to penetrate at B sets in a price collapse.

Just prior to "1" there is a surge in volume. The candle closed well off its highs, but the next day's candle suggests buyers are overcoming the supply. The excessive volume at this point is of concern. The sheer volume required to move the stock risks a level of exhaustion. In fact, we see a gap up at 3 on high volume that is sold into. We can assume that the selling pressure came from both locked in buyers around "A" and "B" and from "smart" money noticing the background selling ( and perhaps involved in the initial supply also).

We know that "3" was an offload day because the next day is down, and the break of resistance at "4" elicits no real volume and the move is subsequently faded. However, the correction has been shallow and the volume has been subdued.

What is now of interest is the support point @ 43.5 to 0.44c. You can see the last few days has seen attempts to penetrate support on increased volume, which appears absorbed ( support is holding).

Friday sees volume entering on a narrow range. This is of interest. Either buying has absorbed supply at this level, or the buying was sold into. We might get our answer in the next few bars.

What we do have is a low volume correction followed by a volume surge. For aggressive traders, this sets up a possible buy stop @ 45.5 with a stop to sell @ 43. This is still in the correction zone but gives the best R/R.

A breakout from the broadening formation would be taking out 47c.

 

[tech/a]

My opinion of CAH given that yesterday was less than convincing going on with the test.
Note the gap down high volume bar ZONE is from the close of the day before to the low of the trading day.As can be seen both zones proved difficult for price to get through.It appears Selling dried up more than buying over powering---There was some above average volume on bars clearly indicating buying and the breakout bar in the first Zone was also on above (Not spectacular) volume.

Click to expand

 

[Boggo]

Happy to discuss it but its not a breakout perhaps we should have a "Technical opinion on charts" thread

Correct tech/a, not really in keeping with the intention of the thread other than from a potential eventually (I hope) breakout.
I will post it up again when it breaks out in just over a week

Thanks for the VSA etc input though, interesting.

 

[tech/a]

I will post it up again when it breaks out in just over a week

Bought a rye smile to my dial!!

Shoes
COE really is reacting to volume zones as expected.
There just doesnt seem to be that effort required to accelerate the stock forward.
It just keeps getting bogged down by sellers as it stumbles forward.
Excellent commentary on your analysis.

 

[$20shoes]

Bought a rye smile to my dial!!

Shoes
COE really is reacting to volume zones as expected.
There just doesnt seem to be that effort required to accelerate the stock forward.
It just keeps getting bogged down by sellers as it stumbles forward.
Excellent commentary on your analysis.

Yes, the onging supply could be a problem. Given the large volume on Friday, an up move from here should be efficient ( that is, require little volume to push it). If we continue to see higher volumes as it ranges around, I'd be wary.

It's not the prettiest developing pattern, and I will lose interest if it continues to meander around for another week.

For the sake of posterity, let's assume the trader takes a position at 45.5, and I'll continue to analyse why the potential breakout is looking good or shaky.

 

[tech/a]

Thought Id go back over charts mentioned and add to commentary.
Charts only posted if there is something interesting to show.

CAH As expected now in the resistance zone without any real buying to launch this stock to new highs.Has been a good 30% in the move since noticed.

BMN consolidating as expected after its strong move up.Testing the high nothing to report just yet.

VOR as expected was a poor example

BRM
Powering along nicely and proving a solid move can continue to occur without strong volume.


GXY consolidating and not showing signs of anything much.

Bau
Interesting and could be a potential candidate for some addition to a position.
The correction is a little deep indicating some ranging before a direction is found


WHC doing well.
UXC struggling
HIG not showing a tendancy towards weakness but not going on with it either.
SDM
testing highs with a good reversal today on very little volume-- so not much selling

 

[$20shoes]

We'll scratch COE here as well. Further weakness set in after the large volume day and the broadening pattern is morphing into something else. No need to stay interested in this one. Better opportunities await...

 

[Boggo]

Just one of a dozen or so that have appeared between last night and tonight.
This is SAR and I bought into this today when it looked like it was going to close strongly above yesterdays close.

My initial glance and quick view thoughts (Tue 2nd) when I see this type of setup come up in my scan, ie, first view last night to decide if its watchlist worthy.

1. Its in an overall uptrend and has had a slight correction which would have triggered a few stops and added to the downward correction.
2. Price pattern has a support level not too far from current price.
3. The potential 'real' resistance at 68 to 70 is far enough away from entry to allow me to exit without loss or with minimum loss if either the stock or I change our minds.
4. There is a possibility of short term resistance at around 65, if it turn down at that point it could form an ABC correction and if C = A then it could drop to low 50's but based on the previous upward momentum I expect it to plough through that.

Summary, does it go in the watchlist - Yes, has it got an obvious exit area - Yes
Where would I buy it - anywhere above today's ( Tue 2nd) close if that looks like holding.

Procedure followed, I now hold with the possibility of buying more on a break of 70.

My basic procedure and my

(click to expand)

 

[It's Snake Pliskin]

Thought Id go back over charts mentioned and add to commentary.
Charts only posted if there is something interesting to show.

CAH As expected now in the resistance zone without any real buying to launch this stock to new highs.Has been a good 30% in the move since noticed.

BMN consolidating as expected after its strong move up.Testing the high nothing to report just yet.

VOR as expected was a poor example

BRM
Powering along nicely and proving a solid move can continue to occur without strong volume.


GXY consolidating and not showing signs of anything much.

Bau
Interesting and could be a potential candidate for some addition to a position.
The correction is a little deep indicating some ranging before a direction is found


WHC doing well.
UXC struggling
HIG not showing a tendancy towards weakness but not going on with it either.
SDM
testing highs with a good reversal today on very little volume-- so not much selling

Tech just on the top chart in your last post I'm assuming your signal bar is the breakout bar? If so do you have an entry rule being the signal bar is the breakout bar? Or would you wait for a confirmation of a confirmed break that hasn't failed?

 

[It's Snake Pliskin]

Vista and windows 7 have their own image capture utility - Snipping Tool.

Open Snipping Tool by clicking the Start button

, clicking All Programs, clicking Accessories, and then clicking Snipping Tool.

More detail here:

http://windows.microsoft.com/en-US/windows-vista/Use-Snipping-Tool-to-capture-screen-shots

That's the hard bit done, Snake. Now there's no excuse

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will contribute when i have some patterns to show. Interesting thread.

Thanks $20shoes for the information.

 

[tech/a]

Tech just on the top chart in your last post I'm assuming your signal bar is the breakout bar? If so do you have an entry rule being the signal bar is the breakout bar? Or would you wait for a confirmation of a confirmed break that hasn't failed?

Here is tech's method of trading Breakouts.
Not entirely disclosed but will be good enough.

(1) I have 2 searches (A) Searches for the first occurrence Using a "latch" of a breakout within the search parameters for the entry for Tech trader so the Formula is public knowledge certainly in Metastock.
I take the majority of my trades from this signal.

(2) (B) Searches for any occurrence of the formula breakout (No latch) I take some trades from this search. but mainly look for "Boggo" type entries on these due to the trade already being underway. It also alerts me of continuation breakouts of stock I already have.
Stops are set at the closest major pivot low.

(3) I pyramid trades quickly if (1) I see a short pullback of 2-5 bars not too deep and very low volume on the pivot Ill buy day after the rise above the pivot and set the stop at the Low volume pivot low,Treated as a separate trade.

(4) I pyramid at the very first higher high from consolidation after the initial trade. Stop at the closest pivot low and this is also a separate trade.

This is NOT easing into a position all positions are full sized trades based upon Fixed Fractional Position sizing.

Exists are
(1) I have a time exit
(2) I have a profit stop exit
(3) I have a discretionary exhaustion signal exit.
(4) I run a trailing stop behind intermediary pivots.

There you go have a play with that.
All Codes are on "that other site".

 

[Boggo]

Here is tech's method of trading Breakouts.
Not entirely disclosed but will be good enough.

Sounds like we are pointing in the same direction tech/a (pardon the pun )

Another example perhaps, this is KZL.
It ticked most of the boxes a couple of nights ago but is still in observation mode.

It has a significant hurdle ahead of it but its trying, just thought it may be worth watching to see what it does.

(click to expand)

 

[Boggo]

Not all go to plan and some I just lose patience with

I have previously had a good run on IDL, got stopped out and then re-entered again.
This time however the time without action has become a factor in my tightening of my stop position and the short excursion to 44.5 was enough to say bye bye for now.
I have done this in the past only to see the stock turn up and run but I have seen the opposite occur more too.
I would now like to see it break down to an ABC pattern with a target of around 41.5 but if it turns up it will get my interest again.

Took a small loss on this but if its not going up then its just tying up funds that could be used elsewhere.

(click to expand)

 

[It's Snake Pliskin]

Here is tech's method of trading Breakouts.
Not entirely disclosed but will be good enough.

(1) I have 2 searches (A) Searches for the first occurrence Using a "latch" of a breakout within the search parameters for the entry for Tech trader so the Formula is public knowledge certainly in Metastock.
I take the majority of my trades from this signal.

(2) (B) Searches for any occurrence of the formula breakout (No latch) I take some trades from this search. but mainly look for "Boggo" type entries on these due to the trade already being underway. It also alerts me of continuation breakouts of stock I already have.
Stops are set at the closest major pivot low.

(3) I pyramid trades quickly if (1) I see a short pullback of 2-5 bars not too deep and very low volume on the pivot Ill buy day after the rise above the pivot and set the stop at the Low volume pivot low,Treated as a separate trade.

(4) I pyramid at the very first higher high from consolidation after the initial trade. Stop at the closest pivot low and this is also a separate trade.

This is NOT easing into a position all positions are full sized trades based upon Fixed Fractional Position sizing.

Exists are
(1) I have a time exit
(2) I have a profit stop exit
(3) I have a discretionary exhaustion signal exit.
(4) I run a trailing stop behind intermediary pivots.

There you go have a play with that.
All Codes are on "that other site".

Tech,
I wasn't after all of that. Just interested in the chart at the top. Which bar is the entry and is it the signal bar or are they different?

 

[tech/a]

Sorry Snake too much info.

The condensed version

 

[It's Snake Pliskin]

Sorry Snake too much info.

The condensed version

Thanks Tech, pretty much new they were breakout bars. But, would they be your signal bars too?