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| Trade new high breakouts differently than markets retracing through the congestion of old numbers. A special condition exists when a stock trends into a new high. No built-in supply of losers exists within that time frame. Price can easily go vertical when supply doesn't overhang a market. Pullback strategies often fail in this momentum environment because the market can trend sharply due to the imbalance. Traders must be willing to enter positions near highs rather than pullbacks and use tight stop losses to control risk. One of the best setups for this type of trade appears when 4 or 5 price bars flag near the top of tall expansion candles, right after a breakout. These can print in any time frame and look similar to the small flag that followed this BMCS move. |
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