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>> Options Mastery #4 - Calendars <<
January 17th, 2019
January 10th, 2019
Hey, this is Sasha and welcome to another episode of "Let's talk stocks."
In this episode, we're going to go back and take a look at some technical analysis basics.
We're going to take a look at that Pennant pattern.
It is a continuation pattern which means it's a pausing pattern. It pauses and then it continues moving in the same direction that it originally came from.
We'll look at the:
You can think of it like a triangle pattern just a lot more compressed. It's a lot smaller of a trend.
Usually with a Pennant pattern, what happens is let's take a look at the bullish case scenario -- is it runs up very quickly. So the movement is very fast on the bullish scale.
Then, what happens is you create this triangle a tiny triangle, symmetrical triangle pause. What this does is it hits one point here. This will be resistance one, and it slowly isolates here for maybe four bars. It could be eight bars depending on what you're looking at, but it separates here for a couple of points.
We could do maybe three or four points.
Then eventually, it'll break out very quickly to the upside.
The pause is very short, and that's the critical difference here comparing it to let's say a symmetrical triangle. This is much shorter a symmetrical triangle maybe two or three times longer or takes a lot more time, and this is much more violent here.
Again, this could come back and retest this supporting resistance level. So it'll go back and then go higher, but that's what the pattern looks like.
Of course, it's going to be in the same direction that it's moving in because it's a continuation pattern. The volume, if you're looking at the volume, you're going to have much more substantial volume. This is heavy in the movement of the direction of the stock.
Then once we get into this little digestion period, it might die down or get a little bit lighter or weak. Then again, you see a massive amount of volume coming in as we get another breakout move to the upside.
What you're looking for is the distance here that we've gone from the initial breakout point to that resistance level.
That's typically an excellent level to go with and then move that to them from the breakout of the resistance to the next stage. It'll probably be somewhere up at this level will be. The target area that you're looking to hit is somewhere right around that point.
It doesn't always work out that way. That's a guideline. I also think of it that it's going not to hit those levels because we've already moved with such great steam and power. And when things move like a rocket ship, eventually, they pull back.
Typically, the target from what I've seen is -- it doesn't always hit those targets. Usually, a little bit less especially with these fast acceleration movements.
It just runs out of steam. It runs out of energy. It runs out of fuel. It's just flooring the gas pedal, so the movement is it doesn't always hit those targets.
I would take a look at just right where it breaks out these levels or retest those levels.
So this could be your entry point one and two and that might be an excellent level to get in is right after the breakout.
The issue if you get in earlier is --
During this digestion, a pattern sometimes it could turn into a longer consolidation pattern and then it'll roll over.
That's why you typically wait for that high volume.
And once that high volume comes in along with the breakout in price, nice full price bread, that's a much safer entry point.
It's very similar so again. We'll look at this tight pennant pattern, and if I draw it a little bit backward here, you can see we're coming from higher prices. We move lower, and we get this little pause move around in here a little bit. Then you know we break down and move lower.
That's the way it works on the bearish case, very similar to the bullish case just flipped a little bit volume the same thing.
You're looking for a tremendous significant volume anytime that you're moving lower. So that would be high volume, this might be lower volume and then higher volume again on the breakout or the breakdown. Just because still there's more selling pressure that comes in.
Anytime that the movement is strong, just like here, we're moving down anytime the movement is strong. They'll probably get the higher volume.
Here for the shorting side, this would be your shorting entry opportunity.
If you're looking to go long on this, I will wait till you follow through and continue all the way down and create a consolidation pattern down here somewhere or find a reversal pattern before you look to enter in an extended position.
But that's the bearish case scenario. The projection on this one is similar to what we do with the bullish. You look from where it started that sell-off to where it began to do the bounce and consolidation pattern. And then, take a look at that and move that range to the next stage from where we're breaking that support level in the pennant.
Sometimes, these things can look a little more like a sideways digestion pattern.
Sometimes, they might look like this and then move lower. This could be considered maybe a flag like a pattern just because there's not a lot of ticks and not a lot of candlesticks in that area. But again, very similar to the flag pattern.
If you haven't seen that video, take a look at that, but sometimes these can look similar to a flag pattern where they're just a tight consolidation range that's pausing and allowing the stock to continue moving in the same direction. That's why it's a continuation pattern.
January 3rd, 2019
December 27th, 2018
Hey, this is Sasha and welcome to another episode of "Let's Talk Stocks."
Today, we're going to go back to another technical analysis basics video. We're going to look at Symmetrical Triangle Patterns.
We're going to take a look at both the bullish and the bearish case scenario. We are going to take a look at:
I want you to keep in mind that the symmetrical triangle pattern is a continuation pattern. Which means, it continues. It's just a pausing pattern that slows things down. Allows things to digest and then moves forward into the same direction that it came from.
You also have reversal patterns that change direction, but this one is a continuation pattern.
You have a triangle that's pretty much like this. It's going into a V formation sideways. Think of it as a bracket on your keyboard.
When you're looking at this, it could almost resemble a pennant pattern, but it's a little bit longer.
When you look at a bullish case scenario for this, it's starting from lower level prices and the stock price then continues to increase until it hits the first resistance level. I'll call it R1.
We then start a pullback, and we start creating a second point this will be our supporting level one.
We'll move up into higher prices, again at resistance level two.
This is where you can slowly start creating a slope where the pattern may slowly begin to looking and evolving like a triangle.
Right now, you don't know if it's going to be a descending triangle or this symmetrical triangle because you only have one supporting point.
But here, as we start continuing and creating, let's say support level two and moving up, and we have resistance level three, you can slowly begin to see how things will evolve.
Now, what happens with this pattern eventually because it is a continuation pattern. This pattern eventually will break out in the same direction that it started from.
This triangle was just a pausing moment.
A moment for you to digest the upward trending movement.
Because that movement on this upside was a little too far too fast.
Prices get a little stretched. People think, "Hey, I need to take a few profits." So, it pulls back, but they say hey this is a good deal other people are starting to come in it's a good deal to get into that stock. It's been heading higher. Let me get in on it. They've been waiting.
They continue to do this motion where you know you have some buyers that are selling better. Then, you have other people buying in at lower prices.
It creates this a crowd psychology effect to the point where enough buyers are now fully stepped in. More buyers are getting in to allow the price to continue to move higher.
You want a higher volume in the direction that it's moving or continuing. So, higher volume there.
When you're doing this consolidation phase, you might get a little bit lighter volume here. So, it'll be light and then more massive volume also as you're moving to the upside.
Now, if you're looking at individual bars, what you'll generally want to see and it's a little harsh to look at those things. Anytime you're getting pops or movements to the upside, and it would be nice to see higher volume there because remember that movement is going to continue into higher prices in the future.
It'd be good to see those. But it's a little bit more difficult because usually in this consolidation triangle phase, it's a little bit more of a distribution pausing pattern. A little bit less volume will be traded.
You're looking at kind of this R1, S1 -- so resistance one support one that's being created and you're looking at that distance.
If that distance is this long or I'm going to say half of my hand. Then, you'll go about half of the side, and that's your target.
Doesn't always work out that way. Doesn't work out perfectly but this is around your goal on that projection.
Now, in all big case scenario and the way you look at things with time with inflation that thing could run up 10, 20 times higher. If you look at it a hundred years from now, that thing could skyrocket to the moon.
But in general, from a pattern perspective, you're looking for about that range width of the triangle to hit your target.
One of the proper entry points would be right after we break out of the triangle pattern and just a little above it to give it room to make sure it breaks out.
You could do it also on the bounces. You'll probably notice these on like support two, support three levels.
You could do it there, but that's a little early because what happens is if this thing rolls over. You could be in a little bit of trouble because you don't know if this could start digesting, distributing and then roll over.
Usually, you'll wait till entry point right up here above all these resistance levels or this descending resistance line and when the volume picks up, and it's moving to the upside.
That's what I would do as far as the entry point goes.
Sometimes, you'll also get slight little pullbacks here where this will retest that triangle pattern. Then you could get in it, just on that retesting of that resistance level which will be supported.
That'll be entry point number two.
It's very similar the main difference is when you're looking at your triangle pattern on the bearish side. Instead of going from lower prices, you're going from higher prices to lower levels. Then you do the same isolation movement, and you'll expect that stock price to head lower.
Here you have resistance levels, and that'll be a one, two, three, four. Here, you have some support levels that it may hit and then again support level 1, 2, 3, 4.
You may not know that this pattern is evolving here up until about the second point even then it's tough to see.
Usually, by point 3 and four is a little easier to see if you're looking at an entry point. This, of course, would be for a shorting opportunity.
But an entry point would be somewhere right after it breaks the supporting level of that symmetrical triangle and then it moves lower, and of course, you're looking for higher volume this time as we go down in price.
You're looking for a heavier volume especially as you break probably lighter volume as you're moving sideways and then maybe heavier volume on that initial sell-off.
That's what you're looking for because you want the volume to always be heavy in the direction that the price is moving to or when the price is moving very quickly. Typically, you'll get heavy volume. They work hand-in-hand together.
That's what you're looking for when you're looking at a symmetrical triangle.
It's a continuation pattern. If you have a bullish movement, you're going from lower prices then you're pausing a bit, and then you're moving higher.
If you're looking for a bearish movement, you're moving from higher prices, and you'll pause a bit, and then it'll move lower.
Then eventually, you might get into lower prices here where the stock basis and then continues moving higher could create a double bottom over here. It could build multiple things here, could digest here, and then continue moving higher.
Remember, this is just a pausing pattern and most of the time stocks appreciate with time.
It's just a question of how long are they going to pause here, or how big is that sell-off.
Also, when you're looking at the distance of how far this will go bearish, it's the same as it would be in the bullish side. You're looking at the range of that triangle in the fatter area and then move it down. That would be your target.
Of course, just like in the bullish scenario, in the bearish scenario, it could come up and retest those levels and then roll over and move into lower prices giving you another entry opportunity if you've missed the first one.
Anyways, that's the symmetrical triangle pattern, and you know it can work in both directions bullish or bearish.
December 20th, 2018
December 13th, 2018
Hey, this is Sasha and welcome to another episode of "Let's Talk Stocks."
In this episode, we're going to go back into some technical analysis basics.
I'm going to take a look at the rounding bottom stock chart pattern.
A rounding bottom when it comes to stock charts is a reversal pattern. It doesn't always have to be a reversal pattern but typically what happens is -- you go ahead, and you create this rounding bottom effect.
Often, it comes from let's say higher prices then stocks play around and isolate here kind of like a digestion pattern to change that momentum around of that direction.
You got a little bit of resistance right up here at these swing points or levels, and then the stock will eventually break out.
Often, it can retest that support or resistance. So this will be a resistance or support level that'll retest and then it can continue to move higher.
You're looking at it like this.
Sometimes, it can also come from lower prices. Meaning, being a little more bullish and then you have a pause, and then you move higher.
This is the way that the pattern looks like.
Sometimes also known as a saucer pattern, when you're looking at it because it is like a saucer.
It's a little different than the cup and handles pattern.
The cup and handle would have a handle here, whereas this one is retesting this support right so your entry when you're looking at this stock would be probably over here or when it retest, so these would be your two entry areas.
When you're looking at the volume for this, often the volume declines on this pattern because you're digesting the movement.
Sometimes, later on, as it starts to pick up speed because you're changing directions, you might have or see an increase in volume and especially on the breakouts if you see a strong breakout that volume might be a little bit strong. So keep an eye out on that just because of the decline in volume here as you're digesting.
Overall, the pattern works in the way we're digesting sideways.
Instead of just going sideways, like many other stock patterns do where they're just isolating in this range, well this one creates a little bit more of a friendly turn around.
Think of it like a big boat turning around.
That's really what it does. Sometimes, you can move here and then it'll go back down. It may look a little weird that maybe it's not a perfect saucer or a perfect rounding bottom, but it creates that rounding softens the cushioned effect.
You're looking at the, let's say the top of that saucer almost to the bottom of that, that's a good range and then take a look at how far that can go and draw that up here.
This would be your target, of course, if your stock is moving to the upside. I mean, it can go much further. It's just that initially with the pattern, that's the target.
And then with inflation just due to price rising, it can move much further and beyond those prices.
But that's a good guideline for a primary target where you may want to take some profits.
I've also seen that this chart pattern sometimes, depending on the number of ticks can get confused with let's say kind of like a Head and Shoulders pattern. Because overall with a Head and Shoulders pattern, when you see that pattern, you might see something like this. It looks like a rounding bottom as well.
It's not as important how to correctly identify -- is that a head and shoulders or are that a rounding bottom? These patterns do have some technical specifics to when you can claim them a rounding base or a head and shoulders or a cup and handle.
But overall, your primary goal and objective are to say, hey where's my entry point and often it's just that top of that saucer or where it starts with that resistance level.
So, you're watching that and the influx of strong volume.
When you see strong volume coming in and price moving past resistance levels really, that's more of a key and more important than is it the rounding bottom or is it the cup and handle.
It does not matter. What's more important is hey where do I get in, how do I manage my money, how do I manage that position and that'll be a little bit more favorable.
But as far as the rounding bottom pattern goes, understand, it's more of a pausing pattern.
Often, it's a reversal pattern, but it can be both. It pauses that stock to allow it to consolidate, to distribute the shares so that it can build more energy to move to the next stage.
Stocks don't go up every single day. They need time to pause and digest, and that's what this pattern does.
It's usually a little bit of a more extended pattern. Many patterns are six to eight weeks, just like the cup and handle. This one might be eight to twelve weeks, and it could be a little longer depends on market conditions.
But just something to watch that is just, you're looking for a change in direction often or just a pause and break in an excellent movement to the upside or the downside. Is only pausing that movement allowing things to digest so that way you can continue further into higher or lower prices.
December 6th, 2018
November 29th, 2018
November 22nd, 2018
November 15th, 2018
Hey, this is Sasha and thanks for joining me here for another episode of "Let's Talk Stocks."
Today, we're going to go back into some basics of technical analysis. I'm going to take a look at the triple bottom reversal pattern.
Keep in mind patterns can be a continuation of where they continue the trend or reverse the trend from where they're coming from.
The triple bottom it stems from hitting three bottoms similar to the double bottom. So if you know about the double bottom, this is going to be very similar.
If we look at our supporting point, it's going to hit a couple of points here.
It starts with a downward trend -- so this is our previous trend.
It moves here when we have this downward trend, and this is our first bottom that we hit.
As we move here in the downward pattern, there's a lot of selling pressure that goes into the stock.
Now eventually, you get to a point where there are buyers that want to step in. They say, 'Hey, it's a good value on the stock.' It may go ahead and do a little bit of a bounce here.
Then other people say, 'Hey oh I'm glad to get it to get out of this stock, so it bounced. I'm ready to get out because it'll probably continue moving lower.' It goes ahead and hits another bottom point.
This is our second bottom.
Keep in mind -- this is our support point or support level here that's being created.
Now, this also starts to create a little bit of resistance up top -- so this is our resistance number one.
And then again, we could go ahead and try and get up to those upper prices because people are again buying it on value. But maybe it doesn't make it that far, so we go and create a triple bottom there -- so this will be our third bottom.
Eventually, this stock what it tends to do with this pattern is it ultimately goes in and breaks out past this resistance level.
Sometimes, this will come in and hit a double top here. So this is one thing to watch out for that we'll talk about here in a minute.
But in general, you got three bottoms here that are created and then eventually the pattern reverses because it's a reversal pattern. And it continues moving into those higher prices.
That's the pattern and the way that it looks.
When you look at the volume of this chart, you typically will want this volume to slow down as the stock is moving lower.
Initially, it's going to be high, especially if you're starting from really high prices. But with time, you want that to decrease because you want those prices to slow down and change direction.
To change direction -- let's say you're driving 50 miles an hour. How do you change course? Well, you got to slow down and make a turn, or you know you got to have a curve.
That's really what we're doing -- we have some time here to make that turn and that curve. So, to change that direction, we want to slow things down as we're coming in to bounce.
Then, when you bounce, you'll probably want a little more volume on the bullish side. Anytime you get these bounces, and you'll want more volume and especially on this later bounce on the breakout. That volume should be excellent or huge on that break out especially breaking out of that resistance level.
That's what you want the volume to be.
As we decline on these depreciating levels, as we pull back from resistance, you want those to be lighter because now you got more buyers that are coming in. More buyers are stepping into the stock and that's why the volume should be picking up to the buy side because we're going to reverse.
You're looking for it's a little difficult to project these movements because this stock could have been selling off from really high prices.
When you get into a triple bottom like the double bottom, a primary projection might be well, let's say I take this first or second supporting level and go up to the resistance.
When I do that, here's my level or range. Then, what I would do is take that consolidation range and put it kind of from the break of the resistance to right there, and that could be my target or projection.
But the reality is the stocks usually appreciate with time and with inflation. They continue to go into the moon. That's just the essential nature of stocks.
Until you get the crash, of course, and then again they keep inflating. That's inflation for you.
We could get back into those upper higher prices where the stock initially started the sell-off. You might even go into even further higher rates into the future over the next five or ten years, depending on how long you're looking to be in the stock or watching the stock.
What you could do is you could get in on these bounces, but you don't know if these bounces will continue further to roll over into the next leg or the next down leg because this could be a double top.
It could even create a triple top right.
You see how these patterns could look like something else.
So instead, the better approach is to wait for that breakout right there, and this could be your entry point.
Sometimes these patterns will come back and let's say they come back and retest. They're testing that support level because before it was resistance now it supports and when that bounces that could be an entry point right there.
If you missed entry point one, your second entry point could be right there on the next bounce as you come back to retest that level.
That could be another entry point.
Remember that this pattern is a reversal pattern. So as you're coming down the trend, you're going to reverse. Eventually, you want that to slow down, and that you-you see it slowing down by watching the volume.
As you get bounces, you want that volume to pick up.
Let's say this peak to start to pick up a little more volume. This peak puts possibly to be a little bigger than the last peak. It doesn't always happen. Then again, as you break out past that resistance, you want even more volume.
So that's a tip.
But remember that this could also look like a double top or a triple top pattern, where this thing could actually continue and roll over even further.
That's why you're waiting for that entry point on those brakes to confirm which direction this stock is moving. Otherwise, you might get a movement in an unexpected direction because remember the pattern won't be called that pattern until this kind of completes itself.
But for you to do the trade, you have to do it almost early enough to get in on it. To capitalize and profit from it.
I'm Sasha, an educational entrepreneur and a stock trader. In addition to running my own online businesses, I also enjoy trading stocks and helping the individual investor understand the stock market. Let me share with you some techniques & concepts that I used over the last 10+ years to give you that edge in the market. Learn More