Two days ago, I wrote about one of my favorite patterns, the higher high, higher low setup.
What better way to follow up on that article than with a real example of a profitable trade I made this week, trading that exact setup and pattern.
If you have been following me by now, you might have gathered that I have a few setups that I love and always come back to.
The consolidation breakout pattern is one of them. The W pattern is another favorite of mine, and right up there with those two is the higher high, higher low setup.
The price action tells a story and paints a picture. I see that picture on the chart, specifically in the form of unique patterns.
When I see the higher high, higher low pattern, I can act decisively as this is a pattern that I have seen and traded many times.
Asia Broadband (AABB)
The stock is a recent runner after it experienced a sharp rise in volume and price beginning on the 28th of October.
The stock ran from $0.08 and four days later hit a high of $0.286. So in four trading sessions, the stock increased 257.5%.
A move like that, along with the sharp increase in volume, definitely grabs my attention and gets me focused on the stock for potential opportunities.
So before I get into the opportunity and the trade I made, let’s cover the basics first.
What is AABB?
AABB, according to Yahoo, through its subsidiary, Asia Metals Inc., focuses on the production, supply, and sale of precious and base metals primarily in Asian markets. It also operates AABB Gold token, a minted mine-to-token gold-backed cryptocurrency, and AABB Wallet.
What was the catalyst?
On the 28th of October, the company announced that it is currently integrating and testing the network components in final preparations to release the proprietary cryptocurrency exchange within the AABB Wallet.
The release of this news resulted in the stock’s initial breakout and the surge in volume.
I liked how the stock formed an uptrend after it appeared to have topped out at $0.286.
After pulling back from the highs, the stock put in a higher low on Friday last week. That higher low was then followed by another higher high and low the following day.
Therefore on Tuesday, I was looking for a higher low, higher high long opportunity in the stock.
The higher low was confirmed in the morning on Tuesday, which led me to believe that the stock might have the potential to make a higher high later in the day and continue to trade in the upward channel.
I entered the trade at $0.209 on Tuesday morning and exited the long at $0.244 in the afternoon, as the stock extended to the upside and came into a potential area of resistance.
Not only was this a break and butter setup, but it was also an excellent example of following up on stocks that have recently run.
Often, a stock that has recently run might continue to have volatility and favorable setups for a while as many people might continue to follow and trade the stock.