This is a pattern I have been using for my breakout trades, I was never good at figuring out what gap ups

would move and what gap ups would not. My theory about why this pattern works is that it forms a number

of incomplete head and shoulders... it is a key component to figuring out if you are seeing the right pattern.

The downside is that if someone with a lot of money thinks they see a head and shoulders, then it will be a head

and shoulders, so watching price action is very important. In the stock below, ECOR, there were over 100M shares traded

yesterday, and not much today, which means there are a ton of shorts still holding their positions. A person with a large account

could cause a short squeeze by drawing people in that simply look at patterns (like me I guess, I have a few more variables than

just the pattern). The mentality of both longs and shorts plays into these patterns, shorts can make a ton shorting supernovas

because momentum buyers pile in, smart money can cause squeezes because shorts are cynical by nature, if something is up more than 

they believe it should be, just short it. For the lazy ones that have a "set it and forget it mentality", once an aggressive buyer takes hold, 

especially when there is a high short interest, there is the potential for another explosive move.

 

My variables are:

Break of a long term down trend in a beat down stock - its a penny stock so it must be worthless

Double bottom flag, with a sharp W pattern, the right side has to be higher than the left for

the bottoms (makes a nice head an shoulders... FYI, a head and shoulders does not have a larger shoulder than the head...)

Price within striking distance of VWAP

Holding above VWAP or consolidating very close under it.

Aggressive upside moves at key points, which can be seen if you are watching the chart and watching the ladder

A good risk reward entry - the left side of the W bottom is best for me, with a stop at the open

of the first green candle to break the downtrend of the W. Also I look for a failure to complete the right shoulder 

Signs of aggressive buying in the area like long wicks on candles, etc, large candles as price moves away from the breakout,

elevated volume, bids stepping up and sellers getting run over.

Massive volume on the break of the downtrend is always good. The stock below was very slow moving today, but a stock like WIMI 

exploded, as did PSV last friday (7/10/20).

This pattern is all about consolidations that make higher lows. As long as that is continuing I will stay in the position, especially if

I got big initially and took some off at a key level to build a buffer.

 

Included in ECOR are little flags to show areas where you can orientate yourself in the pattern. Use breaks of trends and where support and resistance is

in the pattern below to figure out which part of the pattern a particular spike or dip belongs to. Squiggles denote consolidations in a certain direction, 

square bottoms are dips with a push higher after the dip. The cup that is drawn is just to help you see that things are progressing as planned. 

Don't fuck around with holding a position that is going against you, it is a good way to blow up your account. Just get out. I drew down about $500

this morning on this stock due to the size I had, with it only moving 10 cents after my entry. I stayed in because everything that was happening I expected

to happen, BUT if the stock had went against me I would have had a really bad day, and I have a bad habit of getting into stocks that go against me.