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.
Setup: On 7/17, LMT broke out from a consolidation (notice the flat 20/50-MAs). Then the subsequent +Gap Breakout on 7/23 was an Igniting Gap, closing with a bullish Range Expansion bar (+R/E), which is very bullish. Both of those setups were very bullish and buyable, with a Price Void (i.e., insignificant resistance to the left) to allow LMT to move higher.
After a robust rally and bullish price action (shallow retracements, red bars ignored, etc.), fast forward to September where LMT consolidated in a bullish manner at the 20-MA.
On 9/20 and the following day, LMT closed with two bullish Wide Range Bars (+WRBs) and with a closing Breakout. This grabs our attention to monitor for a bullish entry.
LMT then went sideways for five more days, not violating the low of the most recent +WRB. Demand was overwhelming supply, with buyers accumulating and not allowing for a retracement.
Because of the overall bullish price action and consolidation, it had a huge Price Void (i.e., insignificant support to the left) to allow for a fluid swing trade higher.
The entry was to buy stock or liquid call options over the high of this consolidation where shown with a protective stop under the consolidation.
Multiple Time Frame (MTF) Alignment: Although not shown, the weekly chart was also a bullish Breakout to all-time highs (as well as the respective military sector ETF), helping to ensure a high probability of success of the LMT 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, you can see in the Telegram trade updates how we recommending selling partial lots into strength to protect gains. Trailing under the low of a daily bar is a proper way to manage gains.
Profit: As you can see, the trade made $738 profit (5.5% return) in an easy-to-manage swing trade. Had you bought 2000 shares and followed our trade management, you would have made $16,060 profit.
