How does a stock signal that a big move is coming?
How do you get prepared to profit from the pending move?
How can you earn 12.3% on a stock in just over 5 market hours?
It’s all about chart pattern recognition! That’s how!
Take a look at the following chart of Canadian Solar, Inc. (CSIQ):
This is a classic short-sell set-up. After all, eventually all stocks will change their trend. In this case it was from up to down.
After a period of being in a clearly defined uptrend as evidenced by the stock trading above the Pink line there came a time where the uptrend was changing trend from up to down. If you were long this issue that trendline break to the downside told you all you needed to know to get out and lock your gains.
If you were looking to sell this issue short that break of the Pink uptrend here too told you all you needed to know in order to consider taking a position on the short side by selling it short with a protective stop loss.
How do we know a change in trend is near?
The early warning sign that a stock may change its trend from up to down is the formation of a double top (red line). From there it’s all about the downside break of the pink line. And as far as risk mitigation goes, a close above the red line is your stop loss.
CSIQ fell hard yesterday and followed through to the downside this morning, giving those that were prepared to profit a quick 12% plus 5-hour gain!
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