Breakout and pullback trade type

I mentioned , I use support and resistance as most important stock analysis tool. And all trades and strategies are based on these levels.

So I defined 2 basic trade types for my simple stock trading:

Break trade type

This type of trade expects that there is so big interest in buying or in selling of stock that important level of support or resistance will be broken. I expect that investors and trading activity during this break is so strong that move price of the stock to profitable levels quickly.

You can see situation before such breakout of resistance level on this chart of MYGN stock

breakout setup on MYGN stock chart

And watch as price moved into expected direction after successful breakout.

profitable breakout trade with MYGN stock

This was really textbook example with huge move.

Pullback trades

This type of trade looks for opportunities for bounce of support or resistance level. Such bounce can be found after break of resistance (now support) level or in developed trend. It is known as method for stock trend trading.

You can see some consolidation after up trend move on next example. Support level for price is represented by moving averages and rising uptrend line .

pullback stock trade setup

And what happened after several days you can see on this stock chart

profitable pullback stock trade

These examples above are for long trades. But you have to use these type of trades also for short trades. You need only revert view and use support for breakdown and resistance for pullback.

Return from Breakout and Pullback trades back to Stock trading system

footer for breakout page