Throwbacks and Pullbacks
Throwbacks and pullbacks are important patterns. Why? Because they happen about half the time after the breakout from a chart pattern. Not knowing about them invites disaster when the stock returns to the breakout price and continues lower. You sell for a loss only to watch the stock recover.
Exhibit 6.1 provides a typical example of what a throwback looks like.
Imagine that you have a buy stop placed a penny above the top of this ascending triangle. The order triggers at A. Since you are a seasoned pro, you always use a stop and decide to place it below the prior minor low, at D.
Price rises for a few days and then ...
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