Here’s where it all come together – when you get a setup with all the low risk patterns coming together, you have the potential for explosive profits. Watch this.
Inside bar/NR4 bar – on February 2nd, 2000, Adobe Systems forms both an inside bar and a narrow range 4 bar. Notice that the trend for the previous few days is down. The IB/NR4 is a sign of indecision with the short term downtrend.
Pullback – as ADBE is making a pullback. In this case, the stock has made three consecutive lower highs, setting up a buy on any trade above the previous day’s high.
Matching Move – Adobe has approximately equal moves, the first down leg (from A to B) is $9.562, the second leg, the “matching move”, (from C to D) is $9.220. Almost identical moves.
Support / Resistance – Where price had previously been stopped on the way up (resistance) is where price stopped on the way down (support).
Retracement – The pullback in price stops near the 38% retracement level of the winter 1999 to fall 2000 rally.
Q uick review. You have all five patterns occurring at the same time. The Inside/NR4 bar, the Pullback, the Matching Move, the Resistance-becoming-Support, and the Retracement.
Would you like to see where this setup is going? Alright, you already know what happens next, but watch anyways.
As you clearly see, the stock price roared higher. No looking back.
Let me tell you, these trades happen often enough. Your job is to find the setups, place the order, protect yourself from losses, and enjoy the profits. Be prepared for the inevitable setback that comes from small losses. And make sure you enjoy the enormous profits that come your way!
Now you have seen five patterns that setup low risk opportunities to profit in the stock market. Now it’s up to you. I hope this course has been everything you expected – and more!
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