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Bullish Breakdown Patterns

Anyone using traditional technical analysis over the past 9 months or so to predict bearish patterns have, for the most part, been sorely wrong. Quint over at tickerville has a name for this: bearish patterns turned bullish breaks-- it's when a pattern which should breakdown only starts a downtrend for a short period of time and then we see momentum quickly reverse to the upside.

I like Q's name, but I prefer the "get some people short and then rip their faces off" trade.

Needless to say, until we stop seeing these sharp reversals, I will remain very hesitant to play simple breakdowns.

Let's take a look at some examples. I will do a "before" picture and then an "after" with the result:

JPM

X

OIH

POT


by Steven Place

Steven Place is the founder and head trader at investingwithoptions.com/