Textbook Breakout And Reversal Pattern For Panera Bread Thursday
Breakouts and reversals happen every day in the market and you have to know how to profit from them. Two of the key indicators on these breakouts are high Relative Strength (RSI) above 70 and high sustained volume.
As you can see in the Thursday chart, Panera Bread (PNRA) gapped up over $165, then pulled back to below $163 and consolidated for the lunchtime hour from 12pm to 1pm on low volume. During that time shares were trading in a tight range between $162.50 – $162.70. At 1pm the RSI index was approaching the critical 70 RSI level on high volume. It ripped up to $164.50 and then put in a doji candle at $164.23. This was your ideal entry point for a long position.
The stock ripped up to $166.59, a nice 4 point move from the initial breakout. Once it pulled back and consolidated, RSI dropped below the 70 level. This was your sell indicator. Now the reversal setup is in play where you could have made 2pts on the downside move by shorting it.
If you notice the volume by price on the left side of the chart, PNRA had lots of price support at the $164.50 level. It pulled back to there and bounced right off of that level. This was your indication to “cover” your short position and initiate another long position.
PNRA made a nice end of day rally on high volume to close the week at $166.04. The key to spotting these trends in real time is to keep an eye on your indicators and volume. Once you get comfortable with these types of setups, you can focus on one stock and consistently profit from the intraday breakout and reversal moves. If you had caught every move in Panera Bread, you would have had a nice 6 point profit on the day.
Disclosure: Nothing written in this article is intended to be a buy or sell recommendation. This article was written for educational purposes only.