Decision Time for Yahoo YHOO Shares into New Highs

Sep 12, 2013: 2:49 PM CST

With the break to new recovery highs today in Yahoo (YHOO) shares after a stellar recovery, we focus our attention on the “will it or won’t it” continue the breakout or else pull-back once again with a trap.

Let’s take a look at the Daily Chart “Make or Break” key level and put this in the context of the broader picture:

Yahoo YHOO Breakout Bull Trap Trend Continuation Trade

The key focal point for traders is the current $29.50 to $30.00 per share level which reflects the July breakout highs and the current breakout – and reversal candle today – above then beneath the easy-reference $30.00 breakout level.

Just like July, we saw a sharp spike higher, only to see price return quickly toward the $27.00 polarity or lower support trendline.

We’ll be using IF/THEN planning with respect to this level.

A breakout and sustained movement up away from $30.00 per share “should” lead to additional tradable, pro-trend upside action in the context of the Weekly Chart (below).

Otherwise, if we see another return under $30.00 – a bull trap – then we may be anticipating or trading a movement back to the $27.00 per share confluence (this is best seen on the Daily Chart above).

Here’s the broader Weekly Chart Pro-Trend Structure:

Yahoo YHOO stock breakout weekly chart trend trading tactics retracement

After a multi-year compression or consolidation pattern (yellow highlight), shares broke powerfully above the $16.50 and $17.00 per share level on higher buy-volume and upside momentum.

The breakout – and new bullish uptrend – continues to this day where we encounter the current “make or break” price level into $30.00 per share.

Yahoo’s (YHOO) share price has doubled from the $15.00 per share Midpoint Value Area or central price of the compression pattern.

Whether you’re trading Yahoo shares or just following along for a “walk forward” real-time educational example of how to plan for a “breakout or trap” situation, continue following the short-term activity relative to the current $30.00 per share focal level.

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Corey Rosenbloom, CMT
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