How Subtle Chart Patterns Can Lead To Explosive Rallies

Stock traders who focus on trading only the most obvious chart patterns are missing out on huge gains that more subtle patterns can provide.

Here’s an excellent winning trade example of how you can profit by being open-minded in your analysis.

Most traditional investors who get inflicted by the exciting “swing trading bug” get started by purchasing buy one or two trading books about technical analysis.

Popular stock trading books typically share much of the same basic content, such as what a bullish chart pattern should look like.

This classic trading book focuses on several key price patterns a trader must learn to identify in order to profit from the stock market, such as the cup with handle pattern.

These reliable chart patterns explained in O’Neil’s book are a fantastic starting point for all traders because they add much-needed structure to a chaotic stock market.

Identifying Subtle Bullish Chart Patterns

Over time, traders will eventually come across stocks and ETFs that break out and explode higher from a chart pattern that was not obvious.

For example, a stock breaks out from a base of consolidation and rockets higher, despite not ticking all the boxes for what a bullish chart pattern typically looks like.

Of course, having an objective, clearly defined set of trading rules is crucial for your long-term trading success.

However, too much rigidity in your chart analysis can cause both new and experienced traders alike to miss out on profitable trading opportunities in the more subtle patterns.

Keep reading for an actual, recent example of a winning stock trade that we could have easily missed if our trading system was too rigid.

Smacked In The Face With A Bullish Signal

In our November 21 blog post, we walked through a winning swing trade in CRISPR Therapeutics (CRSP) that led to a whopping +24% gain over a two-day holding period.

But the subtle chart pattern that preceded our buy entry required a bit of an open mind.

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Disclaimer: Past results are not necessarily indicative of future results. There is a high degree of risk for substantial losses in trading securities. All data and material on this website and/or ...

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