It's so hard to buy pullbacks!
That's what a fledgling trader told me there other day after I asked him why she doesn't trade trends.
I can understand her dilemma. I mean, how many times have you bought on the pullback only to see the stock pullback further. You then get stopped out before the stock eventually does exactly what you though it would.
Talk about frustrating!
Well, that's why we don't guess by trying to time the pullback. Instead, we let the pullback play out before entering.
How do we do that?
By waiting for the remount of a key range, like the 9 (ema) and 50 day moving averages.
This gives us confirmation that the pullback is over and puts a repeatable process in place that gives us easy steps to buy the pullback without fear.
The trend continuation pullback setup has been the go-to setup in trading big tech momentum stocks like Facebook, Amazon, Google and Netflix over the past three years. Almost every entry has lead to huge gains, and those that don't are minimized by very small losses. You can beat I'll keep pounding the table with this setup until it stops working.
The Pullback Continuation Setup
In today's video we analyze our current live Netflix position. It's up 8 points from our entry two trading days ago (what a way to start 2018!). The entry was based off the trend continuation-pullback setup.
- Identify the setup
- Plan the trade around key technical levels
- Assess the strength of a bounce
- Break down a trade into 2 parts
- Apply effective exit strategy
- Understand remounts around the 9ema and 50dma
So watch, learn and let me know what you think!
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