Properly Trading Initial Breakouts Using Master Trader Strategies
Trading high-probability setups are the same for stocks, bonds, index and sector ETFs, commodities, or currencies — on any time frame!
Trading Breakouts can be treacherous if you don’t know what to look for since many fail at the outset.
At Master Trader, we have several criteria to define quality setups based on the structure of the price pattern.
We trade Breakouts which (a) have bullish price action at resistance prior to breaking out; or (b) have a pullback and reversal at Minor Support (mS) after the breakout.
Note that we never buy Breakouts which run from the bottom of a range to the top because then the concept of “greater than 100% retracement” suggests a pullback, which we monitor.
Here’s a simple line chart these two setups:
Trading high-probability setups are the same for stocks, bonds, index and sector ETFs, commodities, or currencies — on any time frame!
Trading Breakouts can be treacherous if you don’t know what to look for since many fail at the outset.
At Master Trader, we have several criteria to define quality setups based on the structure of the price pattern.
We trade Breakouts which (a) have bullish price action at resistance prior to breaking out; or (b) have a pullback and reversal at Minor Support (mS) after the breakout.
Note that we never buy Breakouts which run from the bottom of a range to the top because then the concept of “greater than 100% retracement” suggests a pullback, which we monitor.
Here’s a simple line chart these two setups:
Trading high-probability setups are the same for stocks, bonds, index and sector ETFs, commodities, or currencies — on any time frame!
Trading Breakouts can be treacherous if you don’t know what to look for since many fail at the outset.
At Master Trader, we have several criteria to define quality setups based on the structure of the price pattern.
We trade Breakouts which (a) have bullish price action at resistance prior to breaking out; or (b) have a pullback and reversal at Minor Support (mS) after the breakout.
Note that we never buy Breakouts which run from the bottom of a range to the top because then the concept of “greater than 100% retracement” suggests a pullback, which we monitor.
Here’s a simple line chart these two setups:
Trading high-probability setups are the same for stocks, bonds, index and sector ETFs, commodities, or currencies — on any time frame!
Trading Breakouts can be treacherous if you don’t know what to look for since many fail at the outset.
At Master Trader, we have several criteria to define quality setups based on the structure of the price pattern.
We trade Breakouts which (a) have bullish price action at resistance prior to breaking out; or (b) have a pullback and reversal at Minor Support (mS) after the breakout.
Note that we never buy Breakouts which run from the bottom of a range to the top because then the concept of “greater than 100% retracement” suggests a pullback, which we monitor.
Here’s a simple line chart these two setups:
With all Breakouts and other Setups, we need a Price Void (insignificant resistance to the left for longs).
We’re going to show you a few compelling Breakouts we gave our subscribers last week, all of which had bullish price action but set up differently using Master Trader Strategies (MTS).
Below is a daily chart of Chevron Corporation (CVX):
CVX was in a bullish trading range for November and December with a rising 20- and 50-MA.
The December low actually made a lower pivot low, putting into question the bullishness of the trading range.
What happened next?
CVX rallied robustly, 100% of the prior fall and back to the prior resistance highs, Bullish.
What happened next?
CVX had five bullish candlesticks which consolidated in the top half of prior 12/27 +WRB correction bar and above the 20-MA, and closing with a +WRB breakout and Price Void above, very Bullish.
Although not shown, the CVX had bullish higher time frames plus was in a bullish sector showing relative strength, other favorable MTS Concepts supporting a directional long stock or option trade.
The entry was over the high of the 1/3 closing Breakout candlestick. It gapped over it the next day so we bought a 5-Min. high, with a protective stop under the prior day’s low.
The analysis is explained in nightly letter videos for subscribers.
Management updates are sent intra-day by text message to subscribers until the trade is closed.
Below is a daily chart of Caterpillar Inc. (CAT):
Similar to CVX, CAT rallied 100% of the prior fall and back to the prior resistance highs after reversing on Support in mid-December, Bullish.
What happened next?
CAT had six bullish candlesticks which consolidated in the top half of the 12/23 +WRB bar and above the 20/50-MA, Bullish.
This is a proper Breakout Setup because of the bullish consolidation at resistance, which showed that CAT did not want to go lower, higher Demand.
Note, however, that buying a Breakout after the 100% retracement from the December low would have been a novice Breakout Setup as discussed above.
We were monitoring the Setup and entry in the Green Trading Room where active traders bought a 5-Min. high.
It rallied quickly with a +WRB at the open, so we sent to our subscribers in real-time a Telegram text to buy an intra-day pullback.
Below is a daily chart of Vale S.A. (VALE):
In a strong commodity sector, VALE was a Breakout on the daily and weekly charts that we recommended, bullish close.
Below is a daily chart of Dover Corporation (DOV):
Based on the above discussion, not much more discussion is needed on this beautiful setup.
We are giving this Setup and trade idea to our subscribers:
“1/10: DOV – Over $184.05, consider buying stock. Breakout, bullish weekly/monthly. Earnings 1/27. Stop $178.97.”
The initial Breakout was not probability without a larger stop.
Now, however, based on the bullish consolidation and price action at all-time highs, it is proper to buy a Breakout over the highs.
Nice trades!
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