Today, I encountered three beautiful early morning breakout patterns. They either opened flat or with a small gap up. The stocks were first stopped by yesterday’s high level, but quickly broke out of that level and shot up high. This has become my favorite pattern in the early morning session. It has a very high success rate and usually formed the setup early in the morning (often before 10am). Take a look below:
The first one is BID, which broke out completely on the 4th 5 minutes bar.

The ideal entry point …

Take a look at CTSH’s pattern today. The stock shows strong bearish in early morning, however was supported by bullish buyers. Yet the buyers eventually conceded to the bearish sellers and stock dipped below yesterday’s low. The ideal entry point should be right below today’s early morning low at $64.12. And as expected, CTSH showed nice bearish pattern going further.

Another example for this pattern is POT on Oct 28, 2010. Check it here:

POT broke out yesterday’s low in early morning. But the next support point is the day before yesterday’s low, which was shown on yesterday’s chart on the left. Once again, after a small correction, it resumed the down trend and that is a strong signal that the stock is going down. Obviously, it did.

HMSY is another trade I entered today, which I should categorize it as the best tradable pattern. Take a look below:

I like it because it opened flat, and started to consistently moving up, forming a beautiful uptrend pattern until it reached yesterday’s high, which is a resistance level. It corrected at this point, and quickly broke through this level to resume going up. This pattern shows a strong buy signal. Now the question is: where is the potential exit point? Well, the answer is on its previous days’ chart. Let’s …