I recently used a pullback followed by an upside reversal to buy shares in two stocks. One of the buys was within a base, which I used as an early entry. The second was a buy to add to an existing position.
It’s worth noting, I am not recommending either stock. My intention is to show how I used a pullback and reversal for two past trades.
Add To Existing Position of Netflix (NFLX)
The first example highlights where I added to my current NFLX position. NFLX recently hit a new high and I was interested to find a logical place to add more shares.
The stock pulled back for several days, which was followed by an upside reversal. The day after the reversal, as the stock moved past the reversal day high, I added to my existing position.
Early Entry into Target (TGT)
As TGT was forming the right side of a cup I was looking for an alternate entry, before the traditional pivot point. All the moving averages were trending up. With that said, ideally the 200-day would have been below both the 21-day and 50-day.
There was a short two day pullback followed by an upside reversal. As with NFLX, my trigger was the high of the upside reversal day.