Master Trader Breakout: Breakouts and Breakdowns are great setups as Igniting or Continuation trades in trending markets. But many fail without the proper clues or, using the poker analogy, “Tells”. Master Trader teaches how to buy/short the initial Breakout/Breakdown, as well as retracements and reversals to Support/Resistance, as well as continuation patterns. With all Breakouts and other bullish setups, we need a Price Void (i.e., insignificant resistance to the left) to allow the issue to move higher.
Initial Setup: The second blue arrow shows the bullish Wide Range Bar (+WRB) Breakout on 8/23, where we recommended to subscribers to buy the stock over the bar’s high with a protective stop under the low of the +WRB.
Secondary Setup +123: A Master Trader +123 Continuation is a simple setup where we have a bullish Wide Range Bar (i.e., a wide range bar compared to others with little to no tails, +WRB) from consolidation (and not far from the 20-MA), followed by an inside candle which stays in the upper 40% of the +WRB.
This is a very high-probability Setup actionable on any time frame. You buy over the high of the two bars with a stop under the +WRB until it advances as intended, where you can then trail under a prior bar’s low.
Bullish Signals: On 8/5, RCL had a bearish gap down and reversed with a +WRB at the 200-MA. It then quickly rallied back to the breakdown area above the 20/50-MA, and consolidated, making higher pivot lows (PLs), bullish price action.
The trading software marks PLs with blue dots and PHs with red dots. On 8/23 (second blue arrow), it was a closing +WRB Breakout setting up the Breakout trade, followed by a +123.
The entry was the same in this case: over the high of the two bars. But what makes a +123 more potent is that the issue consolidated for an entire day in the upper part of the +WRB, giving more confidence that the strength of the +WRB will follow through once triggered.
Multiple Time Frame (MTF) Alignment: Although not shown, the weekly and monthly charts were bullish for the setups, helping to ensure a high probability of success of the issue moving higher.
Trade Execution and Additional Analysis
After entry, we are always in management mode, trailing pivot lows and monitoring price action with bar-by-bar analysis.
After entry, RCL rallied robustly, closing with a +WRB, where we sold 1/3 of the position into the end of the day.
It actually set up another +123 (although not a quality one since the distance to Major Resistance was not that far away). We moved our stop under the low of the two bullish inside bars to protect profits.
Profit: As you can see, the trade made $271 profit (5.1% return) in an easy-to-manage 5-day swing trade. Had you bought 1000 shares and followed our trade management, you would have made $4,170 profit.
Conclusion
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