Blog Ben Sturgill

TPST “W” Pattern Breakout

“A chart is a chart is a chart.”

It doesn’t matter if I am charting a penny stock or AMZN, I still look for the same things. For instance, last Friday I spied a classic “W” pattern setup in Tempest Therapeutics Inc. (TPST), and I looked to play the continuation of the “W” pattern breakout and strong volume.

At nearly $20 per share, TPST was by no means my usual penny stock play. But that didn’t keep me from making the trade.

If there’s one thing I know, it’s chart patterns…and chart patterns don’t discriminate based on stock price.

Technical analysis is the same regardless of the price, or asset class for that matter. The same principles I teach can be used for stocks of all price levels, as well as currencies, commodities, and so on.

So when I came upon TPST breaking out of a classic “W” pattern, I didn’t worry about the price tag, I simply lasered in on the technicals and trade potential.

What is a “W” pattern?

If you’ve never heard of the “W” pattern, maybe you are more familiar with the term double bottom instead.

The “W” is just another term used for the double bottom.

The reason for this is the pattern itself. When formed, the stock creates a visual “W” on the chart (as you can see on the chart below).

But first the basics…

The stock makes a leg down, then tries to rally but hits resistance and ends up pulling back to form a second down leg (double bottom).

The stock then rebounds one more time and is finally able to punch through the first leg up and move higher, creating the “W” visual on the chart.

Such a fun night