Buy Setup Rules:
1. Place a buy above the top trendline to catch the upward breakout.
2. Once in the trade, place a stop loss below the bottom of the chart pattern that you are trading.
Ascending Triangle Buy Signal
When price breaks out upward from an ascending triangle, buy.
Riverstone form 2 ascending triangle breakout buy signal. One on 11 May 2020 and another on 30 June 2020. We put a stop loss each, somewhere below the apex. One thing to note is that you should not chase a stock. If you cannot buy it within 5 to 6 percent of the breakout, then skip the trade and find another.
Uptrend Trend Channel Buy Signal
In the Ascendas Reit chart, we can see an uptrend trend channel forming. Likewise, the same buy signal logic apply. As the price pull back and then break the consolidation resistance, a buy on breakout signal appear. Then you setup your stop loss slightly below the resistance breakout.
Important Point
Once you think that a bear market had ended, buy and hold from a year to 1.5 years. A bear market recovery is going to fill your bank account with increasing joy numbers.
Conclusion
The buy setup pattern logic is quite straight forward, the same logic apply even if you are trading a flag, rectangle or any other chart pattern. Buy on the pattern breakout and put a stop loss somewhere below the breakout pattern which you decide that the breakout had failed. As a trader, stop loss is the most important rule to follow as it preserve our funds to fight another trade.
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