One of the best chart patterns to trade is the breakout of a nice long base. The longer a stock is in a basing pattern the greater the potential for a powerful move once it breaks out of it’s base. The best breakouts are on high volume. When high volume is present that means most likely institutions are buying into the stock. A stock needs institutional demand to make sustained moves higher. Bases also provide a clear exit point below the base if the trade goes sour. Look to buy right at the breakout, if you miss the initial breakout do not chase the stock and buy when it is too extended. If you miss the breakout try to wait for a low volume pullback to where the stock broke out from. Click on the chart below to see an example of this strategy.
Click to enlarge
Jason Martin, CFP & CMT
Good Risk Reward, Inc.
For professional investment advice on this topic contact:
Allgen Financial Services, Inc.
888.6ALLGEN (888) 625-5436