Chart Pattern Trade - Swing - Novo Nordisk

This trade is built around a classic Wyckoff Spring, a setup we use frequently at FoundryStrat due to its repeatability, clearly defined risk, and attractive asymmetric payoff when it works.

Following a sharp drawdown earlier in the year, Novo Nordisk established a significant prior low, which acted as an important reference level for future price action. The initial reaction off this level was constructive, signalling that buyers were prepared to step in and defend the range.

As price moved higher, it failed near the upper boundary of the range and rolled back over, eventually undercutting the prior low. Crucially, this breakdown did not hold. Price quickly reclaimed the level and closed back into the range — a defining characteristic of a Wyckoff Spring and a strong indication that selling pressure had been exhausted.

Our entry is taken on confirmation, following a close back above the prior support level. This allows us to participate only once the failed breakdown is evident, reducing the risk of being early.

The stop-loss is placed just below the prior day low, where the trade thesis is invalidated. This keeps downside tightly controlled and clearly defined. Because of the volatility of this stock recently and the long wick on the prior day, the Stop needed is around 11% so make sure position size is managed accordingly. If the stock does move higher, there's around 30% upside to the prior recent high so plenty of room to capture a good risk/return.

This is a setup we see time and again across equity markets. When combined with strong fundamentals, as is the case with Novo Nordisk, it becomes an especially compelling opportunity. Novo continues to demonstrate robust earnings growth, strong margins, and excellent returns on capital, providing a solid fundamental backdrop to the technical thesis.

As always, we’ll review the outcome with a post-trade analysis once the trade has had time to develop.

How did it pan out?

We locked in just over 21% on this trade. Once it moved up nicely to the prior high. Exactly what you'd expect from the Spring set up. There was a pull back and the price closed below the 21 EMA. We're closing the position below the low of that candle.

A further update:

This is why risk management is so important. We closed the trade out on the pull back and close below the 21EMA. Look what happened to price action post the close. You would have given everything back. What we're essentially trying to do is keep compound this 21%.

It's far easier trying to find 10 of these a year rather than finding that one stock that will go up 200%. That's the objective. So with this style, you'll miss some monster moves. But compounding keeps the account growing consistently.

So if you put $5000 on the trade. You now have just over $6000. That's the amount of capital you can use on the next trade and scale up.

Here's the following price action.