A Profitable Stock Trading Pattern

The ETF, MZZ presented a profitable stock trading pattern today. This pattern is highly reliable, as it catches stock holders who are short, and opens the stock strongly against them. One of my favorite patterns to trade, it occurs on a daily chart.

It’s interesting that this trading pattern occured in MZZ today (MZZ is an ultrashort ETF that trades inverse the MidCap 400). This does not look good for the longs. It could put in a double bottom, and break the trendline to the upside. Generally when a stock makes a fourth attempt at support or resistance, it usually breaks through in my experience.

We’ll call this pattern a BL1, Bull Long 1. It’s directly opposite the BS1 trading pattern. The reason it can be profitable is because of it’s reliability.  Yesterday, MZZ closed near the low with a long red candlestick. It not only opens higher today, but gaps higher than the high of yesterday. If you’re short, you are instantly in pain. The pattern can be traded using an entry over the 5-minute high, or 30-minute high depending on your risk tolerance. A stop would be placed under the low of the day. This ETF was traded that way today using a 5-minute high entry pattern for a decent profit.