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.
Real Master Trader Trade with GoDaddy, Inc. (GDDY).
Setup: After the Breakout Failure on 9/3, GDDY came crashing down into the Price Void (i.e., insignificant support to the left) below caused by the prior momentum move up which left no consolidation or pivots.
In September, GDDY built a base of over time on Support (from the prior Breakout) and the 50-MA, with a Price Void above.
Now we monitor bar-by-bar for the entry. On 9/17 where marked with a blue arrow, that was a closing bullish Wide Range Bar (+WRB) Breakout from the consolidation at the 50-MA (an institutional favorite for entering bullish up trending patterns).
The simple entry to buy stock or call options was over the high of this +WRB with a protective stop under the low of the +WRB.
Bullish Signals: On 8/2, GDDY had a bullish gap up which closed with a +WRB at the 20-MA. Notice that at the time the 20-MA was above the rising 50-MA, quickly showing the uptrend.
It then blasted to new all-time highs before the Breakout Failure setting up the expected retracement and new setup discussed above.
The bullish multi-week consolidation at the 50-MA clearly showed where buyers stepped up (demand) wanting to re-enter the stock at these lower levels after the rapid retracement.
Multiple Time Frame (MTF) Alignment: Although not shown, the weekly and monthly charts were bullish for the Breakout swing trade, 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, GDDY rallied robustly, followed by a +Gap, where we sold into strength to book quick gains. Trailing under the low of a daily bar is a proper way to manage gains.
Profit: As you can see, the trade made $418 profit (6.3% return) in an easy-to-manage 3-day swing trade. Had you bought 1000 shares and followed our trade management, you would have made $4,860 profit.
Conclusion
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