Gap-Up Breakouts -- with David Moadel
the longer the base the higher in space hey this is David Modell looking at the
markets we're going to talk about breakout gap ups
it's a powerful chart pattern that I like to look for it does not work 100%
of the time but I found it to be quite useful and it's something that you can
look out for in your charts whether you're trading on the daily candlestick
chart maybe you're a swing trader or maybe you're an intraday trader and
you're using 1-minute candles two three five minute candles this can work on
almost any time frame okay before I get started if you would like coaching if
you'd like more help with charting trading investing whatever it may be
putting together a plan which is important for the coaching you can email
me at David Modell at gmail.com let's talk about the breakout gap up so this
is a daily candlestick chart for Apple each candlestick represents one day of
price action and what we have here is a pretty textbook example okay it's
forming a base before it goes into space and so the longer the base is that means
that when it's a long base you've got tension building and building because
you don't really see tight sideways price action go forever generally
speaking I'm sure they're exceptions to every rule
but you know as it forms a very tight horizontal sideways range and it stays
there and stays there the longer it stays there the more the tension builds
the more likely it seems to me at least that it's either gonna break out or
break down now sometimes you see it just kind of gradually break out you see
small candles and just kind of in a wimpy manner it just kind of barely
breaks above and - you know drifts drifts upwards
that's not super powerful to me I'll tell you what is powerful what could be
powerful what could be more powerful than not only a breakout but a big gap
up I like to see that that's the market telling me that not only is it ready to
break out of this tight range that's been in for a while and all this
tensions been building and building it's ready to break one way or the other well
when you see that gap up see that's not gradually kind of popping
its way out of that range there it is decisive now I don't have the volume
candlesticks down here but if you have the volume candles and it's a big green
volume candle that could be even more powerful as well that might be
confirmation for you in terms of volume I didn't put that here because that
might be distracting okay and so what often times not always but what often
times happens afterwards is well the breakout and we can see that right here
in Apple now you could say the same thing about a break down if there's a
massive gap downwards as well then it might continue downwards because that
could be decisive as well but this one's about breakouts okay but you know break
downs that gap down that could be a valid concept as well does this work for
3 minute 3 minute candlestick charts for intraday traders sure look at Twitter
look how long that basis before it went into space let's draw those trend lines
look at how tight this price price action is yeah I can draw horizontal
lines right there and that's super tight alright let's get rid of that there we
go tight range there drawing like my trend lines as best as I can and then
you know it's stayed right in there will it break out or will it break down we
all know what happened after that all right
BAM okay that big old gap up there boom okay and that's the market telling you
something it's telling you that not only is it ready to break out and again if
there's a green big green volume bar there that's powerful that's even
possibly more powerful okay we also what happened we saw what happened afterward
all right the breakout doesn't always happen like that but I work with
probabilities okay I don't work with anything definite in the markets because
markets are unpredictable like that you don't find a lot of definite things so
that was quick it was short and sweet but that's something that you can look
for all right and when do you buy well you can buy right after the breakout if
you want to right at this candle and if you want to put a stop loss possibly at
this top line here or at the bottom line your choice I think a lot of people just
to be safe would probably put their their stop-loss if they were to choose
between the two lines at this top you know trend line here the one that was
resistance and is now a support that's a possible place to put a stop loss right
here although that might be pretty tight if if it you know if the breakout was
here and you you bought here that might be too tight of a stop-loss you might
want to lower it a bit just to give yourself some wiggle room okay but if
you want to put the stop-loss here that's fine if you want to put it at
this bottom support line here you can do that as well in order to control your
risk which is certainly recommended in most cases all right so I hope this was
helpful to you my name is David Modell this is looking at the markets and again
if you want that coaching if you want more help you can email me for the
coaching at david Modelo gmail.com if you like this video please give it a
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take care Tyger Tyger they're gonna take it off me
Tyger Tyger they're gonna take it off me tight tight