Stock Chart: Rectangle Base Breakout (SPOT)

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
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