Recent Ascending Base Breakout

June 3, 2013 by  
Filed under News

 

In January 2012 we featured Apple breaking out of a bullish ascending base pattern.  Historically, this chart pattern has often led to a climax run for a stock as the price climbs to what will likely be the all-time highs for a top growth stock just as the growth phase is about to end for the company.

 

Shortly after Apple (APPL) broke out of this pattern, it soared more than 50% within 3 months.  And reached its all-time high of nearly $700 last summer.  A level it may never see again.

 

The ascending base pattern is something we definitely have on our radar at all times.  But only on top growth stocks and companies with rapidly improving fundamentals that we feature in our newsletters.

 

Well here is another more recent example.  In fact, you could still get in on this trading opportunity before it makes the lions-share of its move.

 

Before I reveal this terrific trading setup on one of the best growth stocks in the market, I want to review the ascending base pattern quickly.

 

Those familiar with the “three rising valley” pattern will be able to relate and identify this pattern easily.  Basically, its a series of 3 successive highs with 3 successive lows.  Each pullback is about 10% to 15% in magnitude.  And the pattern generally takes at least several weeks to develop.

 

Now the breakout occurs and the buy point reached when the stock closes above the third high.  And the stock often starts a big run from there.

 

And, as I was saying before, it often leads to a climax run where the stock quickly goes up 40%, 60%, 100% or more in a short time-frame.

 

OK, so here is that recent example on an elite growth stock on a daily candlestick chart.

 

 

Can you guess which stock this is?  The pattern often starts to develop after a breakout out of a classic chart pattern such as a cup with handle.  As was the case here back in January of this year.

 

We then see a series of 3 higher highs followed by 3 higher lows.  The third low is slightly lower than the 2nd but its close enough.  Then the stock closes above the third high on very strong volume.  The stronger the volume on the breakout the better.  After years of being a top growth stock, this one might be ready to go parabolic before meeting Apple’s fate.

 

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