Bullish BAMM Breakout in the CD Leg

The BAMM phenomenon can be clearly witnessed upon close inspection of the CD leg. As the price action rallies above the B point, the “magnet effect” begins (see Figure 5.3).

Figure 5.3.

The most important technical aspect of this breakout is the clear continuation to the upside after the price action exceeds the B point. The breakout should continue convincingly until it tests the PRZ. Although not all price action rallies straight to the completion point of the pattern, the most valid situations exhibit decisive continuation. If not, it is best to cover those positions that tend to stall after the BAMM is triggered.