Over the past decade I’ve been trading, I’ve kept track of certain patterns to help me figure out which ones had the highest success rate with the largest returns. I want to share with you one of the most successful trading patterns I’ve discovered through the statistical data I’ve collected.

I call it the Strong Breakout Pullback Consolidation Pattern (AKA Entry #3 in my chatroom) and it consistently appears in stocks that are about to make a big move. Once you learn how to identify this pattern, you can capitalize on these moves and increase your profits.

But what exactly is the Strong Breakout Pullback Consolidation pattern? This pattern is a combination of price action and a recent resistance level changing into support. If you don’t know the basics of support and resistance, I explain it in this video

Listed below is my 5 step process on how I trade this pattern:

The first step is to identify a resistance level. This can be a previous day’s high or a premarket high. To illustrate this, we’ll use the premarket high of $12.26 on the stock ENVX shown below.

The second step is to wait for the price to make a strong breakout above the premarket high. The reason I wait for a strong breakout to happen is because it shows buying interest. The more buying interest the better.

The third step is to wait for the price to pullback to the recent resistance level ($12.26) to then start testing as support. As it’s testing the level as support, you should see a few swing highs and swing lows form where the price continues to struggle dropping below the line. The whole process should take between 10 – 20 minutes.

The fourth step would be to wait for the price to start up trending again where you would enter into the trade with a stop loss underneath the new support line.

The fifth and final step is to hold the position until it reaches a profit level of more than what you were risking. As you can see from the photo below, this pattern produced a potential 9% return risking only 1.7% in just 3 hours.

This pattern works so well that it has produced gains of up to 351% in the span of 7 months from stocks alerted in my chatroom and that’s including the times the pattern hasn’t worked.

Try practicing this setup in a paper trading account so you can master trading it in real time. Once you are ready, it can potentially grow a live account quickly.

Happy Trading-Josh Dennis, Trading Mentor