Consolidation After High Volume Moves Mission Statement:
The goal of this board is to find stocks exhibiting consolidation after high volume upward moves. This strategy makes it possible to get in a stock without chasing it, and also allows for the possibility of high percentage gains. I can't take credit for discovering this method of trading, as I am sure a lot of people trade this strategy. I personally first learned of this type of strategy from eliteG on thetechnicaltrader.net. Some of the examples below are actually prepared and posted by eliteG on the stockmanager.com. General Rules/Steps for the Setup:
These rules are as described by eliteG. 1. Rises up heavily in price and volume. Volume is the key. It must stand out from past volume. This rise can last one day..and I would say a max of 7 days.
2. Falls back for at least 2 days. It is very important that you have at least 2 days of fall back according to my research. Lots of fakeouts happen with just one day of fallback. Volume is generally less than the volume rise in g1. Also a rule I use is that the fall back should not penetrate the low of the low of the first candle in g1. Its a mouthful but the idea is that if this stock showed a strong volume + price rise.. you do not want this stock going back to the levels this happened from.. you want to see support.
3. Breakout and Run tends to happen if high volume comes back in to push the stock past the highest close(or open, whichever is higher) of the initial high volume move. Just after the break of this spot on very high volume is imo the best entry. Penny stocks tend to run 100%. Higher priced stocks still run but not such a high % usually. Chart Examples:
The purpose of this portion of the board is to show examples of charts that exhibited high volume moves, followed by periods of consolidation, and then a large move upon the breakout of the previous high volume move. By no means can these chart examples be considered standards for this chart setup, but it does show the potential of this setup.