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APOL Flirting with Breakdown from ‘h’ Pattern

Classic chart patterns [1] still work quite well, and I trade them regularly, but they aren’t the only patterns out there to watch for.

One pattern I’ve taken notice of in recent months is the ‘h’ pattern.  This happens when a stock has a sudden or steep decline followed by a very quiet and weak bounce.  The bounce begins to fail, and the price pattern resembles a lower-case h.

The way I trade the ‘h’ is to go short upon a break of the support level.  It can offer an entry on the short side for a secondary move lower, and can carry a nice risk/reward profile with it.

APOL has this pattern right now and it’s starting to undercut support here.  The stock has already been very weak since late-October, but it’s struggled to rebound.  It bounced from the $55.35 level back in May, but below that the next stop could be in the $40’s.

Here’s one that’s worth a look.

apol-11-6-2009 [2]

Chart courtesy of Worden [2]

Trade Like a Bandit!

Jeff White

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