The Best Time To Buy Stocks is at The Breakout
We buy the moment of the breakout. Usually there is a period of consolidation forming some chart pattern. A series of technical indications signal a valid breakout. When the price starts to trade out of a specified range, a breakout is happening. The stock chart of Apple’s price action posted in daily candle charts. Listed below are the factors that define this as a textbook breakout. Learn the stock tips below to know exactly when to buy stocks.
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Chart patterns – Apple’s chart pattern above forms a classic cup and handle pattern. Patterns like these are actually common. This classic pattern has been know to be a very reliable indication that a big trend may unfold from this point forward.
Support and Resistance – The top of the cup is the resistance level around $428. When price action breakout above and past resistance, a trend may develop. As you can see the price gap as it crosses the resistance line is very violent may signify the beginning of a major trend.
Stock Volume-As the price of Apple Stock surged notice the volume. The volume spike is a very bullish signal. As a rush of buyers enter the market you can tell there are some big pockets buying up Apple’s stock
Moving Average – All three moving averages are in bullish sequence. 10-day crossing above the 50-day. The slower averages are also bullish with the 50 day above the 200 day. When the technical indications line up in this manner, you should know that a powerful trend may start. Apple is unstoppable.
Price Action -The stock gap up 8% at the opening bell. A huge move. The price is also making all time historic highs. Very bullish. Most traders would be afraid. High prices are good. Breakout Theory is a trading style that is counter intuitive for most people. While most think to buy low prices and sell high, Breakout Theory buys high prices and sells at higher prices.
Average True Range -You can see that volatility is low. A good sign. Typically A breakout with high volatility on the ATR will fail. You can see the past action on Apple’s stock. When the $428 was hit, volatility was high. When it finally crossed $428 volatility was low relative to the last time $428 was touched.
Knowing When to Buy Stocks is a matter of Timing
Precise execution of the above topics on technical analysis will give you the edge in stock trading. By paying close attention the the “behavior” of stocks you can anticipate the direction of where the stock is headed. Knowing when to buy stocks is a combination of many factors. Amateur traders trade on a single earnings report, or a hot press release. Knowledge of support levels and understanding stock volume will give you an understanding of price action. Many new traders try to go by their “gut” instinct to decide when to buy stocks. This is a sure path to financial destruction. Professionals managing billions in wealth do thousands of hours of research using chart analysis and fundamental analysis. Having a set trading plan is the foundation of making big profits in the markets. Breakout theory encompasses a complete trading methodology that ensures minimum risk with high profits. Study the concepts of this website and you will be able to know when to buy stocks like a pro.