Parabolic Curve Pattern
Many times you will see stocks going up like this near the beginning or end of a bull market advance. This pattern creates short term price range bases before breaking out to new highs and repeating this range pattern multiple times as it keeps going higher.
The price action pattern that creates the parabolic curve looks like a staircase. This pattern can last for weeks and sometimes months. The danger comes in near the end of the formation after the biggest move straight up into extremely overbought territory the strong upward price action usually ends suddenly in a price plunge that falls even faster than it rose.
These patterns generally happen to growth stocks that have new products, new technology, new business models, or new leadership. Stocks that perform this strongly are usually market leaders. The key in trading a trend this strong is capturing as much of the move to the upside as possible with trailing stops and having a plan to exit and lock in those gains and not riding it all the way back down.
Example:
Parabolic Setup:
- Bases = RSI 14 is above 70 level
- Bluesky = Price>20SMA>50SMA>200SMA
From Base 1 to Sell point ACEN received 349% total gain
