T3 Live

Kick Like a MULE: A Case Study in Breakouts


First pullbacks following authoritative breakouts offer solid risk-to-reward long setups.

Subscribers had a nice trade last week in MULE as it pivoted out of a Cup & Handle (A on the chart).

The long signal was in the spirit of an Expansion Breakout/180 buy signal.

An Expansion Breakout is a breakout to a new 60 day high on the largest range in 10 days.

Of course the market is not a fine Swiss watch — sometimes the rules are meant to be tweaked.

The important thing to consider is that range precedes price and last week's large range, high tick close bar was the second significant accumulation day in May.

The breakout elicited a 10% move in one session.

On Wednesday, we sent an alert initiating a new long pilot position in MULE based on a backtest of the breakout, which also tied to a pullback into gapfill..

At the same time, Wednesday's pullback left MULE in the Plus One/Minus Two buy position.

This is because the 3 Day Chart is pointing up and there are 2 consecutive lower daily lows on the table.

Leave a Comment: