Entry Tactics
Buying in Bases
The signs I look for when a base is starting to come up the right side.
Nick SchmidtPublishedUpdated
I used to give breakouts most of my attention, but now I care just as much about the base that came before them.
That is why I study the stretch after a stock has already made a big move and then spends weeks or months going nowhere. In my review, some bases have characteristics that make me more willing to act.
The bases I prefer usually start with a stock that has already proved itself to me. The trend was already up, the stock ran hard, and now it is digesting. This is different from a character change, where I am looking for a stock to flip from a downtrend into a new uptrend. Buying in a base gives me time to get involved before the next move if it comes.
Reading the base
Base anatomy. The right side is what matters to me. I read higher lows as buyers stepping in earlier and drying volume as selling pressure easing. My preferred entry is where the stop can live right under the most recent higher low.
During those weeks and months, I think of ownership as changing hands, even though the chart cannot tell me exactly who is buying or selling. Some holders take profits, others move on, and new buyers may be willing to build inside the range without forcing price higher too fast.
Sideways alone is not enough. A base can still be early. It can be nowhere near ready. It can even be subtle distribution, where the chart looks fine but sellers are slowly winning. I care less about the range existing and more about how the range is changing. Mostly the lows, how controlled the action is, and whether the group is confirming.
The lows. Early in the bases I study, the stock often bounces between roughly the same ceiling and floor. As the right side improves, I want to see the lows creep up and each pullback tighten a little. I read those subtle higher lows as evidence that buyers are stepping in earlier and the base may be getting closer to a breakout.
