Cup Pattern Breakout With Ma

Cup Pattern Breakout with MA Reply Pattern Trading May 16, 2017

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Cup Breakout with MA strategy is based on moving averages and Cup pattern of price. This article is advanced, in order to deal with the study of this article, the knowledge to have is: trend analysis with moving averages, price patterns (in particular Cup and Triangles), draw trend lines, horizontal lines, knowing areas of congestion prices. What to Trade: Currency pairs majors, Indices, top stocks. When to Enter: 1. Alternative Entry: Bouncing off of Significant Moving Averages 2. IBD Pattern Breakouts 3. Support/Resistance Bounces or Breaks When to Exit: 1. Stop Losses: 1-2% above or below swing high or swing low or Closing Price violates moving average that triggered trade. 2. Hard Stop Loss 5-7% loss from entry price. 3. Profit Stop: Cash Flow Trade a set percentage 5-10%; or closing price violates selected moving average; or at Support/Resistance. 4. Profit Stop after candlestick reversal signal & close below/above 8 day EMA.

When To Enter: Identify Current Trends, Patterns & Action Points 1. Define The Major Market Trends. 2. When trading from an established list, the trend of many stocks on the list will already be definable. 3. Trade with the Major Trend—This is the Edge. 4. Define Key Trend Reversals and Entry Action Points.

When To Trade:

Identify Current Trends Uptrend: 1. Higher Highs & Higher Lows 2. Up Sloping 20-50-200 day SMA’s 3. 20 day SMA above 50 day SMA (Exceptions: Reversals Patterns or Higher Lows) Downtrend: 1. Lower Lows and Lower Highs 2. Down Sloping 20-50-200 day SMA’s 3. 20 day SMA below 50 day SMA (Exceptions: Reversals Patterns or Lower Highs Sideways: Chaos 1. Box like pattern or Consolidation Pattern

Identify Current Trends: Moving Averages The Moving Averages are key! Understanding what to expect around the moving averages provides the trader with an edge!

The basic thesis behind moving averages is to identify key resistance and support levels of the underlying security so that one can detect the continuation of a price trend or the emergence of a new price trend. Moving averages watched by institutions: 20 or 21 Daily, 50 Daily, 200 Daily. Traders also use shorter timeframe moving averages to better trigger entries and exits. 8 or 10 period EMA works well for these triggers. Weekly Period Moving Averages which approximate the Daily Moving Averages can also be helpful during analysis. 50 Day Moving Average approximately equals the 8-10 Week Moving Average 200 Day Moving Average approximately equals the 40 Week Moving Average

Patterns: Define Action Points 1. IBD Patterns 2. Candle Stick Patterns (Separate Presentation) 3. Moving Average Bounces 4. Trend Line Breaks Supporting Clues: Keltner Channels, Stochastics & Momentum Entry Action Points 1. IBD Proper Buy Points 2. Active Trend Trading Buy Points

Thoughts on Strategic Exit Action Points Executing a proper exit can be challenging unless the trader acts automatically at well-defined strategic exits Action Points. Again with an aim at keeping this initial strategy simple and objective the following exits are suggested. Stop Loss: 1. Hard Stop Loss at 7-8% of entry price if entering off an IBD Breakout 2. Breaking Swing Low or High on Alternative entries by 1-2% or tighter 3. Close below Moving average that triggered trade Profit Stops: 1. Profit Target at 20-25% of entry price. 2. Areas of Resistance/Support like moving averages. 3. Close below Moving average that triggered trade. 3. Stay in trade until a close below the 8 day EMA 4. Cash Flow Trades: Once paper profit is up over 10% adjust trailing stop to entry price plus 5% and then increase trailing stop by 2.5% for every 5% increase in stock price. Or close below 8 day EMA.

Two examples of trade below.

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