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Swing Trading Strategies – Falling Wedge

Here is another one of my favorite Swing Trading Strategies, The Falling Wedge.

This pattern is where a stock reaches a new 52 week or all time highs and corrects in a “Falling Wedge” corrective pattern where is “digests” its gains.

So here is a great example:

1) GPRE has reached new all time highs and corrects over a period over several months. (See my post: Simple Swing Trading Strategy for how to screen stocks)

Swing Trading Stratgies - Falling Wedge

Swing Trading Strategies – Falling Wedge (Click on Image to View Full Size)

 

2) After a corrective period stock is now ready to resume its rise. Here we can see the stock break above the “Falling Wedge”. It then consolidates for a few weeks, this time however it then makes it move on HIGH VOLUME, this tells you its the real deal and GPRE gives you one last chance to get in when it closed the breakout gap. This is where you would have wanted to load up and take a big position now that you have volume confirmation.

Swing Trading Strategies – Breakout From Falling Wedge

Swing Trading Strategies – Breakout From Falling Wedge (Click on Image for Full Size)

(Click on Image to View Full Size)

 

3) Here we can sit back and ride the trend. GPRE rises by 50% in about 3 months. Notice how volume has picked up during the run up. This tells you the stock will likely keep rising as more and more people want to buy.

Swing Trading Strategies - Run Phase

Swing Trading Strategies – Run Phase (Click on Image for Full Size)

So there you have it. Another simple Swing Trading Strategy, that can give you some major gains in a short period of time. Sure beats buying a stock index. Just remember to trail a stop to lock in your gains!

See my post on my FAVORITE swing trading strategy.

This is one of the strategies that Jason Bond and most successful swing traders use.

Read my review of Jason Bond Picks

If Penny Stocks are your thing, then you may be interested in Microcap Millionaires.

Read my review of Microcap Millionaires

If you are looking to open a brokerage account or looking for a better one, I wrote some reviews of brokers I have used and currently using.

OptionsHouse Review (Currently Using)

Scottrade Review  (Used when I first started)

– Robert Walsh