By Steve Gomez

Identifying high-probability setups is crucial for trading success. One powerful strategy that can help you spot potential breakouts is the 5-day and 10-SMA pinch play. In this article, we’ll explore how to use this strategy in conjunction with real-time scanning tools to find profitable trading opportunities. Sign up for Trade-Ideas today.

Understanding the 5-Day and 10-SMA Pinch Play The 5-day and 10-SMA pinch play occurs when price action gets trapped between the 5-day moving average (MA) and the 10-period simple moving average (SMA). This setup can be easily identified on a 15-minute chart using a 130-period SMA representing the 5-day MA.

When the price is pinched between these two moving averages, it indicates a battle between buyers and sellers. The direction in which the price resolves this battle often reveals the future trend. By monitoring these setups, traders can position themselves to capitalize on potential breakouts.

Using Trade Ideas to Scan for Pinch Play Setups Trade Ideas, a powerful real-time scanning tool, can help you quickly identify 5-day and 10-SMA pinch play setups. By configuring a custom scan with specific filters, you can automate the process of finding these opportunities.
To create a pinch play scan in Trade Ideas, consider the following filters:
Price range: $1 to $500
Relative volume: Greater than or equal to 1 (ensures normal trading volume)
Average daily volume: At least 300,000 shares (ensures liquidity)
Price position relative to the 5-day MA: 0.1% to 0.5% below the 5-day MA
Price position relative to the 10 SMA: Above the 10 SMA
By applying these filters, Trade Ideas will generate a list of stocks currently experiencing a pinch play setup.

Analyzing Pinch Play Setups Once you’ve identified a potential pinch play setup, it’s essential to analyze the stock’s chart to confirm the pattern. Look for the following characteristics:
Price action trapped between the 5-day MA and 10 SMA
Multiple attempts to break above the 5-day MA without success
The 10 SMA acts as support, preventing the price from falling further
When the price finally breaks above the 5-day MA with a strong candle close, it often signals the beginning of a new uptrend.

Real-World Examples and Trade Management
The video transcript highlights several examples of pinch play setups, including JMA and HOOD. By setting price alerts just above the prior high, traders can be notified when the price breaks out of the pinch play pattern.
To manage risk, consider starting with a small position size and using the 10 SMA as a stop-loss level. If the price closes below the 10 SMA, it may indicate that the breakout has failed and it’s time to exit the trade.

To conclude, the 5-day and 10-SMA pinch play strategy is a powerful tool for identifying potential breakout opportunities. With real-time scanning tools like Trade Ideas and applying the appropriate filters, traders can quickly spot these setups and position themselves for profits. As with any trading strategy, it’s essential to confirm the pattern on the chart, manage risk, and adapt to changing market conditions.