Highest Probability Patterns For Breakout Stocks
1. Title Slide
2. Good day everyone, this is Roger Scott from Market Geeks with another video
tutorial for you today. Before I begin I want to remind you to visit
marketgeeks.com to download your free swing trading report today.
3. Finding breakout stocks is both an art and a science. Traders rely on visual
analysis as well as technical indicators to help them find high probability set ups
that produce less false breakout signals.
4. Today I'm going to show you a few patterns that are currently setting up in
today's market environment so that you can see by way of example the type of
set ups that we are looking to trade in the coming weeks. Keep in mind that these
are not trade recommendations but a visual analysis of set ups so you can see
how we visually analyze stocks when they are setting up.
5. The first pattern is a bullish inside day pattern. The pattern is a simple short term
pattern that has three days that are inside of each previous day. The pattern
looks like a mini triangle pattern and occurs frequently after a strong trend comes
to a temporary pause for a few days. What I like about this pattern is that it
provides a low risk entry opportunity for traders because the volatility and the
length of the trading bars is greatly reduced from the normal day to day volatility
of the stock. This provides a good low risk entry area without having to incur
excessive risk due to extended volatility which causes extended trading range
and more risk to the position. You can see in this example how MDCO stock is
still in a strong uptrend and is consolidating temporarily. The stock looks like it
will continue moving to the upside in the near future.
6. Traders who follow my tutorials know that one of my favorite stock patterns is the
Tail Gap Strategy. I wrote several tutorials on this strategy and I recommend you
review them at MarketGeeks.com or our video channel. The strategy is a
pullback away from the main trend that is accompanied by a gap. You can see
several tail gap pattern set ups in this example of Sands Hotel stock. Notice that
I'm only taking long tail gap trades because the long term trend is clearly up. The
tail gap set up usually lasts just a few days because I want to see the stock go
back quickly in line with the trend. A reduction in volatility and trading range is not
what I want to see after the set up is triggered with this set up. I like to see the
stock get back in line with the trend within a few days of triggering the set up.
You can see in a few examples on this chart how the stock falls very quickly back
in line with the trend after trading higher after the set up is triggered.
7. Some of the best set ups are combination patterns, meaning two patterns occur
at the same time. This increases the probability of trades working out even
further, especially if both patterns have no conflicts between them. In this
particular case we have a 1 year high breakout coupled with an ascending
triangle pattern. Notice how the stock tried to break above the resistance area
several times before. The trend is strong and everything technically points to
increase in price for this stock. When multiple trades and set ups line up with
each other it truly creates the best type of environment for short term trading.
8. When analyzing stocks for high probability entry set up's, make sure to analyze
the underlying sector and make sure the majority of the stocks in that sector are
pointing in the same direction as your set up pick. Moreover, make sure the stock
market is also pointing in the same direction as your picks because as you know
there is a very strong correlation between the stock market and individual stocks.
Many failed trades could be avoided by following these two basic principles and
using solid trading set ups as well.
9. That’s it for today’s tutorial; don’t forget to visit marketgeeks.com for your free
swing trading report. Wishing you the best in your trading.
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