Swing traders are always on the lookout for momentum stocks that make explosive moves in a short period of time. The breakout breakaway gap setup is by far the best setup for swing traders looking for explosive price action. It is also great for part-time traders who don’t have time to day trade.
There are 4 elements to the breakout breakaway gap setup:
1) a breakout from a developed range
2) a big gap from that range
3) high volume relative to previous volume (at least 2-3 average volume)
4) the breakout is on tangible news such as earnings, rather than rumors and speculation.
In this video we go over $GOOGL to illustrate the power of the breakout breakaway gap setup.
Now that you have watched the video, find some breakout breakaway gap examples in momentum stocks that made explosive moves and share them in the comments below.
This is part 3 in the trading breakouts series “The only setup you need to know”.
Part 1: The breakout pullback setup
Part 2: The breakout-remount setup
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4 thoughts on “Trading Breakouts: The Breakaway Gap Setup”
Few traders are going to be trading high priced goog, unless they have money to burn.
Where would you enter on this setup, slight weakness or strength?
I had the same question as ami – where do you look to enter this setup?
It depends on your risk and positions sizing. If your risk parameters allow you to take a bigger stop, then you can be more forgiving with your entry. If not, you must wait for a pullback, generally to the bottom of the breakout bar.