This strategy seeks to detect established bullish patterns, such as triangles, flags, or head and shoulders formations, that signal potential breakouts above resistance levels. By targeting stocks near their 52-week highs, the strategy aims to select Canadian stocks that are already exhibiting strong price performance, increasing the likelihood of sustained upward trends.
Trading near a 52-week high often implies strong technical indicators, such as higher trading volumes and favourable chart patterns, which are critical in a trend-following strategy. We screened for stocks that have confirmed bullish classic technical patterns. Incorporating a stop-loss is crucial when using trend-following strategies. A stop-loss order automatically initiates a sell order if the position moves against the anticipated trend, thereby limiting potential losses and protecting capital.