What is the best bullish technical setup for day traders?

[Sam Button]

[Steve Walters]

The best trade setups occur at points where groups of traders congregate. Breakouts at resistance levels are one great example of a best bullish trade setup. These are often large round number, or “emotional” trigger points on a chart where traders feel they can cut their losses or magnify their greedy impulses. It takes patience and skill to find these types of setups, and you can’t expect to see them every single day. If you learn to recognize them early, you’re able to jump in and improve your chance of profiting. Trading a breakout of a resistance level is a popular and profitable bullish technical setup, but it is also a challenge to find these opportunities early. The concept is pretty basic. You watch for a price level where the market could not trade higher three or more times. For example, if price rallied to $40 and then dropped back several times without being able to break higher you could have a bullish opportunity developing. One reason is after three tests of a strong resistance level you can be sure many traders have noticed. If price hits $40.01 it could be a critical shift in the market, especially if the move occurs on heavier than usual volume. It’s important to note that while this is a best bullish technical setup, it doesn’t always guarantee a huge move will follow. This makes it important to be certain to use tight stop losses. But when it works the profits can be phenomenal. This pattern is so powerful because it takes advantage of the psychology of traders who continue pushing prices back to the same level repeatedly, and then eventually breaking through the resistance as more traders get involved in the trade and the volume builds to a breaking point. This persistence from traders brings more money into the trade the longer it is building, and once price breaks through the resistance it pulls in even more traders who had been actively watching the trade develop.