Master Trader Breakdown: 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, of “Tells.” Master Trader teaches how to buy/short the initial Breakout/Breakdown, as well as retracements and reversals to Support/Resistance, and continuation patterns. With all Breakdowns and other bearish setups, we need a Price Void (i.e., insignificant support to the left) to allow the issue to move lower (opposite for longs).
Real Master Trader Trade with Proctor & Gamble Co. (PG).
Initial Setup: PG broke to a downtrend in early October. Then, after a bullish retracement, it drifted lower and stabilized, but in a downtrend and below the declining 20-MA. We had a bearish bias and were monitoring for the setup to short (or but puts).
On 10/29 where shown, it closed with a bearish Wide Range Bar (-WRB), below support.
Because if closed with a -WRB below a 6-bar consolidation, the odds were overwhelming that it would blast through the prior pivot low support.
Multiple Time Frame (MTF) Alignment: Although not shown, the weekly timeframe was also in a downtrend, confirming the bearish bias of the daily chart being traded.
Trade Execution and Additional Analysis
We recommended shorting the stock under the low of the -WRB where shown with an easy to manage trail management.
Although we didn’t reap the additional profits from the -WRB tankage on 11/6 because we didn’t want the risk of holding over the presidential elections, it stopped out over a prior day’s high for a nice swing profit.
Profit: It was an amazing setup with easy management. We don’t recommend any share size for traders but assuming a max loss of $300/trade which our spreadsheet assumes, you would have made $315 on this Master Trader Breakdown swing trade.
Shorting 1000 shares would have yielded a generous $2,320 profit.
Conclusion
Master Trader Strategies (MTS): Learn our proven methods for high-probability trades in all market conditions!
Directional Swing and Options Trades daily in the Advisory Swing and Options Trader Letter.
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