Introduction
BigShort empowers you to trade support breakout setups with precision. By leveraging advanced tools like DarkPools, MomoFlow, SmartFlow, and Net Option Flow (NOF), you can identify when a key support level will hold strong and propel the price upward. This guide explains how to spot these setups and trade them with confidence.
What Is a Support Breakout Trade?
A support breakout trade occurs when the price tests a significant support level and then bounces higher rather than breaking down. In this scenario, the support level—established by previous price action—holds firm, signaling strong underlying demand. When the price reverses upward from this level, it indicates that buyers are stepping in, often leading to a traceable, sustained move higher.
How to Identify the Setup – Support Breakout
Draw the Support Line
Identify a key support level by marking previous lows where buyers stepped in. This level acts as a floor for price action.
Monitor the Price Action
Observe how the price behaves as it approaches support. A period of consolidation or a brief dip followed by a strong bullish candlestick can indicate that the support is holding.
Look for Bullish Candlestick Formations
A strong bullish candle (or a series of them) forming on or near support suggests that buyers are overpowering sellers. This is your first clue that a support breakout trade may be forming.
BigShort Provides Advanced Warning
BigShort’s platform offers advanced insights that give you an edge:
DarkPools: Reveals off-market trades that indicate institutional accumulation near support.
MomoFlow: Displays momentum shifts with clear visual cues, confirming rising buying interest.
SmartFlow: Provides real-time activity from algorithmic funds to see if the algorithms are supporting the bounce.
Net Options Flow: Shows exactly how much options money is supporting your trade in unusual options activity. For a bullish resistance bounce look for bullish net options flow right before the bounce - Large pyramids or diamonds with blue on top (call buying) and purple on bottom (put selling):
Together, these tools alert you to the strength of the support level and the size of the bounce before the breakout fully unfolds, allowing traders to get in before the bounce.
How to Trade the Setup
Entry Point
Enter the trade once the price confirms a bounce off the support level. Look for a bullish candlestick formation accompanied by strong BigShort signals outlined above.
Stop-Loss Placement
Manage your risk by placing a stop-loss just below the support level. This protects your position in case the support fails and the price reverses downward.
Profit Target
Set an initial profit target by measuring the distance from the support level to recent resistance. As institutional indicators remain favorable, consider staying in the trade longer to capture an extended move.
Why Trade Support Breakouts with BigShort?
BigShort’s comprehensive suite of tools validates support breakout setups by showing you real-time institutional participation.
This unqiue approach helps you pinpoint your entry and exit with confidence, turning a simple support bounce into a highly actionable trading opportunity.
By trading support breakout trades with BigShort, you enhance your ability to capitalize on the underlying strength of the market while effectively managing risk.
Disclaimer:
The information provided in this article is for educational and informational purposes only and should not be considered as financial advice. BigShort does not provide personalized investment recommendations or advice, and you should not make any trading or investment decisions based solely on the content of this article. Trading in the stock market involves significant risk, including the potential loss of your entire investment. Past performance of our tools, indicators, or any referenced strategies does not guarantee future results. Always do your own research and consult with a qualified financial advisor before making investment decisions. Use of our platform and its features is at your own risk.