Trading Spike and Ledge Pattern

Spike and Ledge

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Trading Spike and Ledge Pattern

The chart above demonstrates a "Spike and Ledge" pattern from the Google daily chart (GOOG). After a sell-off in July 2006, GOOG made a climax sell-off to close below 365 with high volume. In September 2006, GOOG attempted to rally back and made a "Ledge" formation with a series of matching highs and matching lows. A breakout above the "Ledge" formation signals a "long" trade to the upside.

1. Enter a "long" trade above the high of the breakout bar.

2. Place a "stop" loss below the "low" of the "Ledge" pattern.

3. Place a "target" at "swing high" prior to the down "Spike."

Chapter 11: Tops and Bottoms 11.1. Adam-Eve Patterns

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