How to Trade High-Odds Bottoming Patterns
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 – particularly breakouts from bottoming patterns.
Traders and investors often “pick the bottom,” thinking they are getting a great price.
But stocks are often cheap for a reason, and can remain “dogs” -- and some go bankrupt.
Did you know that Bottoming and Topping Patterns set up in different forms and trends?
Most are traps to the uneducated trying to pick tops and bottoms. Don’t be a victim and be whipped around.
At Master Trader, we have several criteria to define quality setups based on the structure of the price pattern.
The Structure of the price pattern will speak to us about the relationship between buyers (demand) and sellers (supply) and the likelihood of reversals and trend continuation.
With all Breakouts and other Setups, we need a Price Void (insignificant resistance to the left for longs).
In this lesson, we are going to show you a compelling Breakout of a bottoming pattern we gave our subscribers last week, which had bullish price action after a Breakdown Failure using Master Trader Strategies (MTS).
Click below to see a VIDEO Review of the Daily Chart of Aspen Aerogels, Inc. (ASPN):
ASPN was showing signs of bottoming and did break out on 3/2, but it failed.
On 3/14, it closed with a bearish Wide Range Bar (-WRB) breakdown bar, suggesting lower prices.
What got our interest was what happened after the -WRB.
Instead of following through lower, it retraced the majority of the move down in two days, then went sideways at resistance. That is bullish price action above the 20-MA.
On 3/22, ASPN closed with a bullish range expansion Breakout candle above the 20/50-MA. There was a clear Price Void above, Bullish.
The analysis is explained in nightly letter videos for subscribers.
It was the -WRB being negated (Breakdown Failure) and bullish consolidation that made it a very high-probability Breakout Setup!
Management updates are sent intra-day by text message to subscribers until the trade is closed.
It rallied robustly after our entry so we decided to book a quick 16+% gain in two days!
Nice trade!
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