Continuation Play Education

How to Trade the Continuation Play

The bouncer play, which is the main focus of this blog, can be a nice play.  When the bouncer does not start to bounce and instead continues in its current direction, the continuation play can sometimes be employed.  The continuation play is a high probability play where a stock moves past the the shadow of the exhaustion candle from the bouncer strategy.  Moving past this candle is the short signal (if the stock is falling initially).  The same strategy for closing out the trade that applies for the bouncer strategy applies here, a loss in momentum.

Let's look at one of the stocks from the daily bouncer watchlist, GLNG.  As is showin in the first chart, there was support at $23.03 that we were looking for the stock to break through for the bouncer play to be in effect.  If the stock does not break through $23.03, the next thing to look for is for the stock to break the resistance level on the long shadow of the exhaustion candle.  This is the resistance level to watch, because if it breaks through there the stock will often continue strongly in that direction.  GLNG did break through this resistance at $23.93 and shot up to a high of $24.87.  We can see this move on the second chart.  This setup is my second favorite, because it leaves an opportunity open even when a bouncer does not bounce.

Good examples of how to trade the Continuation Play
PRAN Intraday Continuation Play
PENN Intraday Continuation Play

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