Moving averages are one of the most used tools in trading because they allow you to identify the presence of a positive or negative trend based on the position of the stock price with respect to it. One of the most important moving averages is the one calculated as the average price of the last 50 trading sessions and if the price is above it (or below) it indicates the presence of a medium-long term positive (or negative) trend .
So knowing which companies have just moved from a negative to a positive trend (so the price has moved above the 50-day moving average) is very useful information.
Within the BullDude.com Membership you will find an article called “Moving Average Breakout” every day containing the best companies that have just entered a positive trend, ie the price has moved above the moving average.
In the image above you find an example of this type of article called “4 Stocks Breakout a Key Moving Average Today” published on April 22, 2020 here on BullDude.com where Snapchat (SNAP) was reported because the price had reached $ 17 exceeding the moving average of 50 days (black line). Since that day, Snapchat (SNAP) has grown by over 55% in the next 3 months to over $ 26.
To date (July 26, 2021) Snapchat’s price has reached $ 78 per share, up 358%.
How do I know if it’s a false breakout?
The breakout is defined as “false” when the positive trend that supported the price growth reverses the direction (going from positive to negative). To understand when this event occurs, there is a red half-line in the chart that indicates the level below which the positive trend can be considered concluded.
A few negative days are not enough to call it a “false” breakout because often the cause is natural temporary volatility (given by the retest of the signal level or profit taking or general market crash).