A New Uptrend, a Fast Pullback, and a Trade Plan
Corsair Gaming is one of our current swing trade recommendations in the Master Trader Advisory Swing and Options Trader Letter.
The pattern in CRSR is also a good example of what we are seeing in many stocks right now. A number of names broke out from consolidations at the end of May as the broader markets recovered from a minor mid-May pullback and pushed to new highs.
However, while the indexes have remained strong within their uptrends, many sectors and stocks have underperformed or failed to sustain those explosive moves.
That is not unusual. - Chart and Analysis Below.
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When a stock breaks out of a base after a prolonged period of weakness, the first move can be powerful but also unstable. Early buyers move in aggressively, short-term traders chase, and then profit-taking begins. The question is not whether the pullback happens. The question is where buyers return and whether demand is strong enough to restart the move.
That is where Master Trader Technical Strategies come in.
On the daily chart of CRSR, the moving averages shown are the 20, 50, 100, and 200-period moving averages. At Master Trader, we use moving averages as visual reference points to help determine trend, alignment, and the relationship between price and multiple time frames.
At the beginning of a new move from a base, moving averages are often close together. As price breaks out and begins to trend, the moving averages start to expand. When price pulls back toward those averages and the prior breakout area, it provides important information about whether buyers are still interested.
In CRSR, buyers first showed up in early May, pushing the price above the 200-MA. Price then pulled back toward that prior consolidation area, and buyers stepped in again, this time much more aggressively. That move drove the stock from roughly $7 to $13 in a short period.
That was too far, too fast, which increased the odds of profit-taking.
The recent pullback has now brought price back toward the prior breakout area and between the rising 20-MA and 50-MA. Last week, buyers began to step up again in that area. That matters because it tells us demand is returning where we would expect it to if this new uptrend is going to continue.
What We Know
CRSR has begun a new uptrend, but it is not yet an established, mature uptrend.
The stock was basing after an extended downtrend.
Buyers first showed real interest when price closed above the 200-MA.
After the breakout, price moved sharply higher and then pulled back toward the prior breakout area.
Buyers are now beginning to reappear near support, the moving averages, and the prior consolidation.
The depth and angle of the retracement suggest that the first group of buyers was not confident enough to hold through normal profit-taking. That is not uncommon when a stock is beginning a new move after a long base.
At Master Trader, we view charts as a visual record of other market participants’ beliefs and expectations, expressed with real money. CRSR is showing us that buyers are interested again, but the trade still needs confirmation.
For us, that confirmation comes if price can trade back above last Thursday’s high. If that happens, we are buyers.
What We Don’t Know
We do not know how high CRSR will go if the entry triggers.
And we do not need to know.
That is a key difference between professional trading and prediction-based trading. We are not trying to guess the future. We are identifying a pattern, defining the entry, measuring the risk, and determining whether the reward-to-risk is worth taking.
What We Believe
If demand increases enough to trade above Thursday’s high, price should move higher.
The first likely area of resistance is between $11 and $12, where price previously attempted to hold before breaking lower. That prior price action created a resistance area that may slow or stall the next advance.
If buyers remain strong, CRSR can either consolidate at that area and then push through it, or move directly into and above that resistance zone.
If the entry triggers and price later moves below our stop, we exit. No debate. No prediction. No opinion.
That is the business of trading.
The Master Trader View
This pattern has enough of the Master Trader Technical Strategies aligned to present a reasonable swing-trade opportunity. The stock has a new uptrend, buyers are returning near a logical support area, the pullback has created a definable entry and stop, and the reward-to-risk is acceptable if the trade triggers.
That is what we teach in our Master Trader Education Courses.
We do not teach traders to chase opinions, indicators, or predictions. We teach a thought process: how to read price, recognize patterns, understand multiple time frames, define risk, and build a trading plan before entering the trade.
The Advisory Swing and Options Trader Letter applies the same process in real time, with ongoing broader-market and sector analysis, swing trade ideas, and option strategies when liquidity allows. Recommendations are updated with real-time text alerts, so subscribers understand not only the trade idea, but also the reason behind it and how it is being managed.
This CRSR setup is a good example of what Master Trader is about:
Objective analysis, a defined plan, controlled risk, and education with every trade.
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All the best
Greg Capra
