A great trader who has been teaching me a lot asked me what my favorite setups were and been studying to best answer....short thread:
1. Multiple gaps (often on a wedge pop), then a short flag/pennant (often forms ema crossback). Inside days, wick play, etc all beneficial
NVDA 582 wedge pop, multiple gaps example...then flagged 628. Looks like I exited too quickly but execution on the buy perfect. FRHC Friday great example. BYND possibly here with three unfilled gaps.
2. Post EPS flag....huge unfilled gap...then a flag/pennant of sorts to execute. DKS possibly a current example.
3. Traditional base breakout but with a major catalyst....EG FSLY 27 earnings, FTCH 32 alibaba investment. Less of these this year but last year with so many positive earnings reactions was key.
First two scenarios....major explosion (VoLUME, gaps, major bull snort), volatility contraction (flag, pennant, inside bars, EMA support), tight area to manage risk and then continuation.
Every scenario has volume cause volume=price, cause=effect AND best if MONTHLY is set up. MONTHLIES!!! Another mentor of mine preaches monthly. It lines up so many different potential buyers for the trade.
To simplify cause KISS....an EXPLOSION, a CONTRACTION, then...a CONTINUATION. Find explosions...then execute on the contraction.
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