Over Tues, Wednesday penny stock FRZ exhibited everything a potential short should: A quick surge up of over 100% in a span of two days all while having no news — a clear sign that this was a pump by a promoter (You can get a list of the top penny stock promoters here!). Knowing it was a pump, everyone knew there would be a dump. This is when your ability to read charts comes into play because charts will tell you EXACTLY when to short.

Well, FRZ developed a pattern on the 5-min chart that is known as a Triple Top Revsersal and it is one of the most predictable patterns to short. 9 times outta 10 the penny stock will tank when this pattern develops. The pattern sets up when a penny stock makes 3 equal(or close to equal) highs which is followed by a break in support. Pretty simple to understand, right? Here’s an illustration of FRZ yesterday (too bad I was in class and couldn’t short it) — YET another reason trading penny stocks is better than class! That’d be a good topic to blog about wouldn’t it?

This really is one of the best patterns for shorting penny stocks, and for good reason cause it works! The pattern is just like the Double Top explained in my FREE eBook, but instead of forming 2 “tops” i.e equal(or close to equal) highs, it forms 3. Consider this: The more a penny stock bounces off a specfic price point the more significant that price point becomes. Which is why the Triple Top Reversal is soooo much better than the Double Top, and more reliable..not to mention predictable…. and that’s all we want down here in the “gutter”

I’m planning on doing a whole series of charting 101 stuff, including how I set up my charts and more chart patterns, etc. in the next few weeks let me know if thats a good idea.

Last 5 posts by Justin Bostwick

• SEC Charges 8 - May 23rd, 2009
• 6 More Penny Stocks Picks: “Buy The Hype, Sell The News” - May 22nd, 2009
• Penny Stocks To Watch For Friday The 15th - May 15th, 2009
• Six Penny Stocks To Watch That Could Make You Money - May 12th, 2009
• The Framework Of An Afternoon Fade And Why It’s So Essential To Short Selling Penny Stocks - May 7th, 2009