December 7, 2020, 10:02 am EST
Rectangle Base Breakout: SPOT
When thinking about buying a stock, it would be reasonable to get in as early as possible from its starting point of its potential uptrend. Base or consolidation means to prepare its powerful uphill rally. Usually, 3-6 months base is a good reference for a base. The tighter the base, the stronger the move it will carry.
Spotify (SPOT) is an example of rectangle base breakout:
- Notice digital music SPOT rallied from 120-300 (April to July 2020) +250% gains
- A rectangle base was formed from July to December in the range 230-290
- December 2 +13% breakout opened its gate out of this range to 320
- Strong volume proved institutional buyers were line-up for its future development
- Buying point should be around 320 since 300 offered a support line
