By Steve Gomez

In my weekly trade ideas newsletter, I always feature a “Trade of the Week” – an actionable technical swing trade setup I’m stalking. This week, cloud-based restaurant software provider Toast (TOST) caught my eye after quarterly solid results initially sent the stock surging higher.

While most traders likely chased Toast’s decisive post-earnings gap, I waited patiently for the “profit take phase” to develop. As is expected, after the frenzied reaction, TOST began pulling back and consolidating gains as shorter-term traders locked in profits.

On Friday, Toast shares found buyers precisely at the psychologically crucial 10-day moving average, which was evident support. This test suggested willing dip-buyers remained interested after earnings. The ability to hold the pullback pointed to Toast’s newly elevated price range and the possibility for continued development.

Based on this support bounce, I officially triggered my long entry today on Monday’s open at $21.40. My initial stop loss was set below the Friday swing low of around $22. I always define and mitigate my downside risk before entering new swing trades.

Thus far on Monday, TOST remains rangebound but continues to find buyers into any temporary dips – a good sign. As long as today’s candle closes above 10SMA rising support on the 15-minute chart, I will maintain my bullish stance with a target of $25 in mind in the short term.

If Toast does push up through resistance around $23, which lines up with last week’s post-earnings highs, I expect another leg higher to develop. I plan to sell partial profits into this breakout to reward the bullish trade thesis. However, depending on the power behind the surge, I may opt to keep a portion for an extended ride north.

The key ingredients seem to be coming together following an intense post-earnings rollercoaster ride – buyers defending a critical moving average, tightening range and declining volatility signaling consolidation, and a potent double bottom reversal forming. Stay tuned for more real-time updates and reviews on this high-probability breakout setup!