One of my favorite swing trades is he failed breakout. With this pattern, a lot of traders get trapped on the wrong side and have to close positions, which creates short-term momentum.
Yesterday, I traded this
pattern by taking a long position in MU. Semiconductors had been acting weak
for months, so stocks can rally hard once a move gets going. Micron has strong
and obvious support around $5.20 as can be seen from the weekly chart:
Last week, the stock tested
support and rebounded sharply. Key for this trade is the time a stock trades at
or below support: if demand comes in at these levels, there should be a quick reversal.
MU acted this way, which is why I bought. As usual, this is just a swing trade,
so I expect price to be higher in the next one or two weeks. I do not care
about the longer term perspective.
Disclosure: Covestor Model is long MU.