The markets have been steadily trending lower for quite some time now, but one base pattern appears to be seeing a pickup in breakouts, and that’s the Most Successful Base Pattern (MSBP). It’s a popular type of base pattern among experienced traders, often pointed to as a sign of potential intermediate-term gains. Here, we’ll look at two examples of stocks that have broken out from an MSBP and could be valuable opportunities for investors.
The MSBP is characterized by two distinct parts. The top part is a three- to six-month intraday trading range, with no major new highs or lows. This establishes a base, and signals a period of accumulation. The bottom part is the breakout, when the stock price breaks out of the trading range and moves sharply higher. This is often seen as a sign of demand from buyers, which can lead to continued gains.
Two stocks that have recently broken out of an MSBP are Intuitive Surgical Inc. (ISRG) and China Eastern Airlines (CEA). ISRG is a medical technology firm that designs, manufactures, and markets robotic-assisted surgical systems and related instruments and accessories for various surgical procedures. The stock had a three-month trading range between $480 and $650 before breaking out at the end of April with a large surge that pushed the price above $700.
Meanwhile, CEA is a Chinese airline that offers domestic, regional, and international flights. The stock had been range-bound between $30 and $35 for three months before breaking out in May with another large surge. Since then, the stock has climbed steadily, and is now trading near the $40 mark.
MSBPs can be profitable forms of trading when entered correctly. However, it’s important to note that not all breakouts will be successful, and it’s important to understand the risks involved. As such, it’s recommended that before entering a trade based on an MSBP, investors conduct adequate while due diligence and assess all available data to decide whether or not the trade is suitable.
In conclusion, the MSBP is an effective form of technical trading when used correctly. The above examples demonstrate how it can lead to gains, but it’s important for traders to remain disciplined and cautious when considering any trade. As long as investors don’t take on too much risk, the MSBP can be a useful trading tool for any investor.