Do you trade pullbacks? Try this strategy
One of the great things about
PowerRatings
is that they can be used in so many different ways. Once you
understand the basics, you can combine them with a myriad of trading styles.
Each day I’m going to highlight some of the different ways you can incorporate
PowerRatings
into your existing trading strategies and hopefully teach you a few new ones
along the way. I’ll also show you some of the ways our members are using
PowerRatings
to improve their trading.
In today’s example, lets take a look at LightPath
Technologies
(
LPTH |
Quote |
Chart |
News |
PowerRating).
(
LPTH |
Quote |
Chart |
News |
PowerRating) had been building a base, trading
between $1.50 and $3.25 for the past 8-months. Usually, the longer the base, the
more powerful the breakouts. The range contracted in December, very often a
precursor to a breakout, and sure enough in early January,
(
LPTH |
Quote |
Chart |
News |
PowerRating) exploded
higher — moving from $2.00 to nearly $8.00 in just 5-days.
A stock will normally pullback after such a large
breakout. One very popular trading technique is to look for a Fibonacci
retracement as a potential area to initiate a long position.
(
LPTH |
Quote |
Chart |
News |
PowerRating)
declined for the next 3-weeks before reaching its’ 61.8% retracement level.
On 1/31
(
LPTH |
Quote |
Chart |
News |
PowerRating) had a
PowerRating
of 7, setting up a potential buy. The stock
continued to decline for the next 3-days, but while doing so its’
PowerRating
went to an 8 and then 9.
At this point the 14-day Stochastic was oversold
and showing a bullish divergence — also indicating a possible rally. With all
these indicators lining up,
(
LPTH |
Quote |
Chart |
News |
PowerRating) setup as a high probability trade.
Yesterday
(
LPTH |
Quote |
Chart |
News |
PowerRating) moved sharply higher to
record a 41% 5-day return since the initial
PowerRating
of 7.
Click here
to take a free trial of
PowerRatings.
You can also
attend a free
class on how to use
PowerRatings
presented by Steve Primo, our Director of Education.
Ashton Dorkins
Editor-in-Chief