Visual Guide to Chart Patterns

The Throwback Buy Setup

Another setup that some traders prefer is to wait for a throwback to complete before buying. That is especially important if you fail to recognize a chart pattern before the breakout or if price launches upward in a blastoff move that sends the stock into orbit before you can hit the buy button.

Throwbacks occur when price breaks out upward from a chart pattern, but the stock returns to the breakout price or trendline boundary within a month. A check of the data shows that since 2000, a throwback happened 58 percent of the time in 10,305 chart patterns of various types.

The key to the throwback buy setup is to wait for ...