CREE consolidated for 15 days, then on October 1st before the market opened, Jonathan Dorsheimer of Canaccord Genuity boosted Cree Inc. to “Buy” from “Hold” and lifted its price target to $80 from $65.
So where and when to enter the trade. On the 5 minute chart below, the volume of the first two bars of the day confirms the breakout. Then the third bar of the day provides the entry. This bar is known as the pause bar. When it closes, it looks like a short. It briefly trades below the 3rd bar, then reverses, completely ignoring the false sell setup, trapping shorts who don’t understand the power of the consolidation breakout and high early volume. When CREE trades over the high of third bar, the long entry is triggered. The stop can be placed below the low of the day.
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