CAVA opened up above the prior day’s high and closed back below its break-out line. Breakouts sometimes fail and if someone bought at Thursday’s open they would have a large loss. I find it more difficult to control my loss with a failed break-out. Where should one place their stop loss? It is not always easy to designate that in advance. However, with the OSB (oversold bounce) set-up it is much easier to determine the price where the set-up has failed. Place the stop just below the low of the bounce, the placed where the black dot appears. Look at CAVA’s chart and compare it to the chart of MLM with an OSB.
The black dot shows the days of the OSB set-up.