Break Out

One of the common trade setups is the Break Out. There certainly are a lot of varying definitions for what this trade setup can look like, but they all ultimately have one common goal: to catch a stock that is right on the cusp of a big up move, either up through prior resistance or up through a moving average overhead.

A current stock that I am monitoring for a Break Out is PKT (Procera Networks, Inc.). As you can see in the chart below, it is “coiling” just under the 10 level:

Some would argue that the stock may be forming a Cup-n-Handle pattern as it seeks to break up through the psychologically important 10 level. As the rising 20 day moving average below inches closer up to price, I see it forcing more action.

For now I am content with having my price alerts in place and will continue to “stalk” it here as it churns.

One thought on “Break Out

  1. Thanks for sharing. Up until I read that I hadn’t considered factoring in the MA and would have seen that more along the lines of a short candidate Triple Top.

    So this article has help arm my warchest with an overlay to be on the look out for before keying in a trade be it long or short.

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