The All Time High (ATH) of a stock represents a significant resistance level—it marks the highest price the stock has ever reached in its trading history. When the price moves above this level, it enters what is often referred to as a resistance-free zone. This is because there is no prior price action or historical supply above the ATH, making it an area with limited resistance from past sellers. Trading All Time High breakouts can be rewarding when the right stock is chosen. Breakout from ATH price level usually results in a short-term momentum.

Meaning of the “Right” stock

There are over 2,000 publicly traded stocks listed on the exchanges, and it is neither practical nor wise to trade every All Time High (ATH) breakout. Not all breakouts are reliable—some may turn out to be false signals or traps. This raises an important question: what are the characteristics of a stock that not only breaks out above its ATH but also shows momentum and has the strength to sustain that breakout?

The answer often lies in the company's fundamentals. Stocks supported by strong underlying business performance tend to reflect that strength in their financial statements. When a company is fundamentally sound, the likelihood of a sustained and successful ATH breakout increases significantly.

How to trade the ATH breakout

Here is a simple way to trade ATH Breakout stocks:

1. Filter out stocks whose Sales/Revenue and Net Profit have a 3 year Compounded Annual Growth Rate (CAGR) of more than 15%. Make a group of these stocks.

2. Participate in these stocks when the price takes Dynamic support at the Triple Moving Average (TMA) of Renko 1% (Daily) chart. Participate in the trade only after the stock has given an All-Time High breakout.

Example

Observe the chart below of BSE on 1% (Daily). The ATH level was ₹5996. After the breakout, the price came near the Moving Averages and took dynamic support from the TMA.

The same observation can be made on the chart below of MAZDOCK on 1% (Daily).

Pullbacks can be tricky sometimes. Some stocks tend to be in high momentum, especially after ATH breakout. The type of stocks can often form one-back or two-back patterns and continue the trend without coming near the TMA lines. Another way to participate is to take the breakout if the price forms a one-back or two-back pattern. If, however, the price corrects by more than 3 boxes, it is okay to trade pullbacks. The following chart of SOLARINDS is an example of this situation.

I have explained the concept of trading multi-year and multi-top breakouts in detail in the course titled “How to Trade Breakouts & Pullbacks” which is included in the TNT One membership. If you have not yet explored TNT One, I encourage you to visit the link below and learn more.