What to look for in a good 4% or $ b/o
- Stock should not be up 3 days in a row
- Negative day or narrow range day (of less than 2%) pre breakout day
- Close near high or within 20% of high
- Orderly pullback or base of 5 to 40 days pre breakout
- No 4% breakdowns during the base or pullbacks
- For stocks with established momentum select stocks with linear first leg
- Avoid choppy stocks based on past action
- Higher the volume on breakout day better it is for 4% b/o
- Volume surge is not critical for $ b/o
4 comments:
When using 4% or $ b/o when does one entry when bar breaks out of range or wait for pullback from breakout bar? If chart is in tight range and one sees a breakout bar does one enter on that bar on high of range high or wait for pullback of gap bar?
Thank you in advance!
when bar breaks out. or in anticipation before breakout
Hi Pradeep,
I personally use a stochastic formula like '(Close - Low) / (High - Low) > 0.8' to filter out everything that does not close near the high. That's in line with you own condition 'Close near high or within 20% of high'.
Similarly, I include in my scan the condition 'Close > Open' to easily get rid of useless stocks for a 4% bullish break-out.
Hope that will helps other traders to make the scanning process easier.
Cheers,
Tonio.
Hi Tonio, but doesn't your filter 'c>o and (C-L)/(H-L)>0.8' remove potential setups that would meet the "Negative day or narrow range day (of less than 2%) pre breakout day"?
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