Explosive Bottoming Pattern
The explosive bottoming technical pattern is one of our favorite reversal patterns to trade. We like it so much that I created a video course to teach the strategy in detail.
As I was putting the finishing touches on the explosive bottoming training course, several stocks appearing in our Daily Alert service, including ADPT, soared 20% to 65% within just a few trading days out of this bottoming pattern.
Some of these explosive gains occurred after the stock reached our profit target in a short trade.
And this was with using a tight 3.5% stop-loss below the ideal technical entry point I am about to share in this course covering this reversal pattern. It has a solid risk/reward ratio when done right and a very high rate of success while using a tight stop.
Of course, not all stocks will make a huge move out of this bottoming pattern, but many will. In more volatile markets, we often take most off once the price moves 4% to 15% which usually occurs within a few days.
How to Find Explosive Bottoming Patterns
It takes about 2 to 3 hours for me to teach someone the important details to help them differentiate between a decent setup and a great trading setup using this technique. From there, they can start using it on a simulator and then later transition to a live account.
But this bottoming strategy is much more than identifying a candlestick reversal pattern in a downtrend. That is all too often just catching a falling knife.
With this technique, the chance of success is about 75% when following all the important rules carefully based on our back-testing over approximately 1.5 years including the recent bear market in small caps from mid 2015 to early 2016.
More recently during a market uptrend (the market is in an uptrend more often than not) the success rate was 85% to 90% in December, January and February of 2017 during a recent back-test.
In 2021, we just saw FLWS and W make big moves within 24 hours of reaching the entry point as the market was starting to pull back strongly.
You Need a Trading Plan
Of course, you need to know the important technical rules in the video course to find the best bottoming patterns. When we ignored these rules during the back-testing, the chances of success deteriorated quickly.
Today I want to share with you a large portion of the first video in the training course.
If we get a challenging market in the months ahead, these videos could be very valuable to you and may be one of the best ways to make money trading stocks. Even if you have a full-time job and are only swing trading part-time.
I say this because this technique is very successful during a market that is either more suspect or one that is trending solidly higher. It also takes very little of your time and is much less risky than trading penny stocks.
The video explains more and gets you started on learning this powerful bottoming pattern in today’s market. A favorite reversal pattern I use in my own trading.