Flat Base Breakout Trade Setup - Educational
Full Credit goes to Jake Bernstein. Jake is a Legendary Futures Trader who has done extensive historical back-testing. He's a best-selling author and Jake has published many of his best trade setups.
One of Jakes' most profitable setups is what he refers to as a "Flat Based Breakout".
Setup Specifics:
1. Typically find on a Daily or Weekly Chart.
2. Ideally You want to see a significant fall in price of the security your looking at.
3. The Longer price stays in the consolidation phase the better. This creates more buyers and sellers and/or shares traded in this area so when "The Break" occurs the traders who were "Short" have to cover creating a quick and significant move.
This is a Daily Chart of UNG (Note: Better Examples Below) which as you can see has fallen from 87.50 in 2010 to a Low of 14.25 in 2012. UNG has been in a Trading Range from 24.60 to roughly 16.60 for over a year now. This has created a lot of "Energy" that could create a significant move when the High of 24.09 is taken out.
On this chart I placed 3 Fib Retracements at major Swing Highs to the low of 14.25 (You can tell where I drew the Fibs from the top of the White Dashed Lines.
For Fib Values I use
0
.383
.50
.618
.786
1.0
1.272 (Extension)
1.618 (Extension)
To clean up the chart I took off all the lines that weren't in a "Confluence Area" of multiple Fib Levels. I find these "Confluence" areas are great Price Attractors. When price breaks above 24.09 the first 3 targets are shown by the White Ovals on the chart. Rough prices are Target 1 = 36.00, Target 2 = 42.50, Target 3 = 50.00 area.
I ran across this chart and wanted to Share the Setup so you can keep a lookout for it. After taking a look at a few charts others have shared on TradingView I quickly found several that I thought were better examples than UNG, However, this specific Trade Setup wasn't referenced.
Timwest Posted a Great chart of TSLA.
Look at the bottom left of the chart. Notice Consolidation area, then a Gap above, Test, then she stock took off.
JR Posted a Great example of symbol NBG
Notice the price action when you press the "Play" icon to fill in the last 2 months.
Can anyone find any current examples?
One of Jakes' most profitable setups is what he refers to as a "Flat Based Breakout".
Setup Specifics:
1. Typically find on a Daily or Weekly Chart.
2. Ideally You want to see a significant fall in price of the security your looking at.
3. The Longer price stays in the consolidation phase the better. This creates more buyers and sellers and/or shares traded in this area so when "The Break" occurs the traders who were "Short" have to cover creating a quick and significant move.
This is a Daily Chart of UNG (Note: Better Examples Below) which as you can see has fallen from 87.50 in 2010 to a Low of 14.25 in 2012. UNG has been in a Trading Range from 24.60 to roughly 16.60 for over a year now. This has created a lot of "Energy" that could create a significant move when the High of 24.09 is taken out.
On this chart I placed 3 Fib Retracements at major Swing Highs to the low of 14.25 (You can tell where I drew the Fibs from the top of the White Dashed Lines.
For Fib Values I use
0
.383
.50
.618
.786
1.0
1.272 (Extension)
1.618 (Extension)
To clean up the chart I took off all the lines that weren't in a "Confluence Area" of multiple Fib Levels. I find these "Confluence" areas are great Price Attractors. When price breaks above 24.09 the first 3 targets are shown by the White Ovals on the chart. Rough prices are Target 1 = 36.00, Target 2 = 42.50, Target 3 = 50.00 area.
I ran across this chart and wanted to Share the Setup so you can keep a lookout for it. After taking a look at a few charts others have shared on TradingView I quickly found several that I thought were better examples than UNG, However, this specific Trade Setup wasn't referenced.
Timwest Posted a Great chart of TSLA.
Look at the bottom left of the chart. Notice Consolidation area, then a Gap above, Test, then she stock took off.
JR Posted a Great example of symbol NBG
Notice the price action when you press the "Play" icon to fill in the last 2 months.
Can anyone find any current examples?
Coming Soon: www.ChrisMoodyTrading.com