Turning Stock Declines Into Your Best Trading Opportunity

Aug 4, 2025

Turning Stock Declines Into Your Best Trading Opportunity

When stocks fall dramatically, many investors panic. But what if those drops were actually the set-up for some of the most lucrative opportunities?

In this article, you’ll discover why sharp declines can set the stage for outsized gains, how the mathematics of recovery works, and how to use classic technical patterns to identify the ideal entry points. And the most important, how to do it easily on Tradingview!


The Power of Recovery: Why a Drop = Big Upside

Every percentage drop in a stock’s price requires a much larger percentage gain to return to its previous high. Recognizing this simple truth can turn “market fear” into “trader’s opportunity.”

Here’s exactly what a stock would need to climb, after various drops, to reclaim old highs:

| Drop (%) | Required Gain to Recover (%) |
|----------|-----------------------------|
| 10 | 11.1 |
| 20 | 25.0 |
| 30 | 42.9 |
| 40 | 66.7 |
| 50 | 100.0 |
| 60 | 150.0 |
| 70 | 233.3 |

If a top-quality stock drops 50%, it needs to go up 100% just to get back, so smart entries after steep drops can double your money on a bounce.


When These Pullbacks Are Opportunity: The Case of Market Leaders

Stocks like Eli Lilly, UNH, Novo Nordisk, ASML, AMD, or Lululemon are examples of quality growth companies that sometimes undergo sharp, hype-driven sell-offs.

Recent history shows:

- Eli Lilly, UNH or Novo Nordisk: Leaders in innovative health solutions, frequently see pullbacks despite strong demand in their sectors.

💊 LLY (Down up to 30%)



Most analysts are highly bullish on Eli Lilly, with most giving it a "Strong Buy" rating. The 12-month consensus price target ranges between $956 and $1,016, suggesting a 25–32% upside from current levels. Optimism is driven by strong momentum in its obesity and diabetes drug pipeline, especially GLP-1 treatments like orforglipron. Risks include high valuation and dependence on future drug approvals.

Technically speaking, Eli Lilly is currently trading within a channel, also known as a flag pattern when it forms during a bull trend. There are two common ways to trade this setup:

You can either wait for the price to drop to the bottom of the channel for a lower-risk entry, or wait for an upside breakout to join the rally at its strongest point.

Both approaches are considered low-risk, high-reward trades. However, entering a position right now is not ideal, as there is still room for the price to decline before a potential breakout in this premium stock.


💊 UNH (Down up to 60%)



The Analysts are generally positive on UnitedHealth Group, despite recent challenges like CEO changes and regulatory concerns. Most believe the company has strong fundamentals and expect it to recover over time. The average 12-month price target ranges from $380 to $400, which suggests a potential upside of over 60% from current levels. While a few firms have lowered their outlook, the majority still recommend buying the stock.

Technically speaking, the price dropped after breaking below its support zone (red).

It briefly paused in a first support area (blue), where some optimistic buyers stepped in, but eventually continued down to a more important zone.

The green area marks the main trading zone from before COVID, with high volume and strong interest, this is where many institutional investors are likely to see value and start buying this premium stock again.

Interestingly, analysts’ average price targets are below the previous support, suggesting a possible pullback to that area. If this happens, it could mean a 60% to 90% rally for UNH from current levels (though some further decline within the green zone is still possible and as we saw at the start, even more profits!).


💊 NVO (Down up to 70%)



Analysts have a cautious but constructive outlook on Novo Nordisk, with an average 12‑month price target of around $80.

While some firms maintain buy ratings, many have recently lowered their views amid mounting competition from Eli Lilly and concerns over copycat semaglutide products depressing growth. A few stronger bulls still point to the long-term potential in obesity and diabetes markets as reasons for future upside. Others see significant headwinds, noting falling demand for legacy drugs and disappointing trial outcomes such as CagriSema setbacks. Overall, most analysts expect a recovery from current levels.

Technically speaking, the price dropped after breaking below a Head and Shoulders pattern, which led to a sharp decline in Novo Nordisk's stock.

The price has now reached a key previous support zone, where the Volume Profile (VRVP) shows significant activity, this often suggests institutional investors may start buying again, viewing the current levels as a bargain. While it's wise to be cautious ahead of tomorrow’s earnings report, the overall downside risk appears limited, given the company’s strong cash flow and solid product pipeline.

That said, investor expectations around obesity and diabetes treatments are no longer as optimistic as they were a few years ago, which could weigh on future growth. Still, from a technical and fundamental standpoint, this area may offer an attractive entry point to sell at $80 for a 70% profit!


Other well-known stocks that could present an amazing opportunity soon include LULU, ASML, MRK, PEP, SPOT SPOT or $NYSE:PFE. Right now, I don’t see strong patterns in these charts, but they’re approaching interesting buy zones. I’ll be keeping a close eye on them, just in case a setup starts to form.

These tickers, as of August 2025, stand well below consensus price targets, so a recovery from current levels toward analyst consensus highs could deliver powerful returns.


⚠️ An example of previous opportunities

I like to understand the past before trying to predict the future, so it’s fair to show some previous examples of stocks that were "on sale."

The first example is META



A well-known premium stock that experienced a massive crash during 2021 and 2022 due to the failure of its metaverse strategy. The stock lost more than 75% of its value, a truly astonishing drop. During this period, a falling wedge pattern formed on the chart, indicating that bearish sentiment was fading. After confirming the pattern, the stock went on to rally more than 700%, yes, you read that right, a 700% rally followed.

Later, another crisis, this time triggered by Trump, hit the stock, causing a sharp 35% drop in just a few weeks. Eventually, the price reached a strong buy zone (high VRVP and previous important supports), and in the weeks that followed, we’ve seen a 63% rally that is still unfolding.

During 2025, we’ve also seen

• NVDA fall 35%, only to come back with a 110% rally.
• MSFT dropped 25% and then delivered an impressive 60% gain afterward.
• ORCL lost 40% in just a few months, and now we’re seeing a massive rally, up 120%, even outperforming NVDA. Simply amazing.

🚀 Finally, some previous published ideas based on the same principle:

⭐ Buying XRPUSD after a large decline (Yes, the methodology also work for other assets!)

⭐ Buying DLTR at the bottom, after a 65% decline to enjoy a (for now) 90% rally.

⭐ Buying GROY after doing two Double Bottoms and breaking the resistances for a 25% rally.

You can find more Ideas on my profile, always based on Chart patterns with low risk and high returns profile.



⏳ Entry Timing: Rely On Technical Patterns, Not Indicators

The key to entering these stocks efficiently isn’t about moving averages, RSI, or fundamentals. It’s about reading price action, volumes and technical chart patterns that reflect buyer behavior and sentiment shift.

Some famous examples:

- Double Bottom: Two clear lows near the same support zone, signaling sellers are losing strength and buyers may take control. The breakout above the intermediate high is usually a decisive signal of a trend reversal. I have published multiple ideas with double bottoms recently.

- Hammer Candle at Support: After a strong decline, a single candle with a short body and a long lower wick near a known support. This shows aggressive intraday buying, hinting that the sell-off momentum is vanishing.

- High Volume at Support: While volume isn’t a classic “indicator,” a surge in transactions as price holds support often marks institutional buying, confirming higher conviction in a potential bottom. Also the VRVP lateral indicator is a great help to know price levels with masive volume.


Spotting these technical structures on stocks deeply “on sale” lets you step in with a skewed risk/reward: your downside is defined (below support), your upside is open (toward recovery), and your edge comes from patient pattern recognition, not luck.

The TradingView screener is a great tool for finding “on-sale” stocks by filtering based on % Change. Pro Tip: The % Change is set to 1-day by default, but you can adjust it to show up to 1 month using the blue dropdown at the top.

After that, you have pattern recognition indicators like double bottoms or the VRVP for volume zones which are both AMAZING.


🔍 Visualize the Opportunity

Here’s your roadmap:

1. Scan for sharp declines in leading names, ideally those with price objectives far above current prices.
2. Strong technical pattern (double bottom, hammer on support, high-volume reversal days).
3. Wait for confirmation of pattern completion with renewed bullish price action or buy in the support, that is risky, but gives a unique risk reweard ratio when it works!
4. Act decisively when patterns confirm, your entry is efficient, your risk controlled, and your recovery math is in your favor.


> Remember: Technical patterns are your best ally for timing entries during periods of panic-driven price drops. Used well, they help you capture robust returns with clear risk management, making market sell-offs a trader’s opportunity, not a threat.

It seems that this August is a good month to start practicing finding bargains.


💬 Does this post helped you?
🚀 Hit the rocket if this helped you spot the opportunity and follow for more clean, educational Chart Patterns trade ideas!

Aug 10, 2025

Note

As a follow-up to the previous article, I am sharing with you the investment idea in Pepsi, one of the companies highlighted as a potential opportunity due to its recent decline.

Sep 12, 2025

Note

We’ve been tracking a group of stocks, separating them into two categories: our top recommendations and others that we kept on the radar as potential opportunities.

Executed Buys – The Top 3 Picks

The three stocks we recommended most strongly have delivered solid results so far:

LLY: +21%

UNH: +51%

NVO: +27%

These are examples of how following a disciplined strategy can lead to consistent gains.

On the Radar – Secondary Opportunities

We also monitored other stocks, but they weren’t as strongly recommended as the top three. Still, several of them have shown interesting moves:

LULU: Still not in the buy zone.

ASML: +17% since we started tracking.

MRK: +10%.

PEP: +12%.

SPOT: Still building a bullish pattern, but already +18% since first noted.

PFE: +11%.

This shows the importance of keeping a watchlist: even if some names don’t meet our strict buy criteria, many can still develop into profitable opportunities over time.

I've recently share dmore ideas like this in DUOLINGO, BTC, Avalanche or INTUIT. Check my profile to know more.