Monday, November 24, 2014

A textbook example of the breakout pullback setup: PTX

Swing traders must have a basket of setups in order to trade consistently and successfully.  One of my favorite setups is the "breakout-pullback" setup.  I recently went over the specifics of this setup on the BullsonWallStreet site, where my buddy Kunal hosts my Swing Trade Service.

PTX is a good example of this setup.  It broke out on strong volume and has now pulled back in orderly volume on low volume.  This is the type of price and volume action we went to see for this setup.

If entering here, a stop can be placed under $10, with an initial target at $11.50.  This gives us around 4:1 reward to risk.  That's what we love about this setup, we risk little to gain a lot.



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Tuesday, November 11, 2014

What You Must Know About This Market: Negative Divergence

No matter what the time frame, all swing traders are interested in trends.  Often the "eye test" of a chart does not capture the underlying strength of a trend.  For that reason, we monitor RSI near highs.  If RSI is not making a high while an index or stock is, that is what I call a negative RSI Momentum Divergence.

Take a look at the current QQQ chart.  Notice that it is basing near highs while RSI has failed to make a new high.  While this is not yet a short setup, it is a clue that momentum is slowing and a pullback is in order.  A close below the old high makes this a failed breakout and possible short setup.

To get a better understanding of the failed breakout trade, watch this video of a resent successful short trade.




If you would like to learn more about how I trade, receive my nightly focus list with market analysis, setups and trade alerts, sign up for a 7 day free trial at BullsonWallStreet.com.  

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