Lets Talk Stocks

Ascending Triangle (Continuation) Stock Chart Pattern: Technical Analysis Ep 222

February 7th, 2019

Listen to the Podcast

Subscribe to the podcast

iTunes Stitcher

Today we're going to go back into the basics of looking at technical analysis and some patterns.

We're going to look at the ascending triangle which is a continuation pattern. That means it continues from the previous trend.

We're going to take a look at:

  • what it looks like
  • the previous trend
  • volume
  • projection
  • entry points
  • a few tips

These are the points that we're going to cover.

What Does It Look Like?

When you're looking at this ascending triangle pattern, it's going to create a trend that is similar to this.

Now as you make your way and move into this, it'll come up and hit that first level of resistance over here. It'll come down and probably hit another level. There is your support level as we go into the lower level of the triangle.

It could bounce around. It might go into a second point. Finally, we'll break out somewhere. Maybe about 80% of the way of that triangle. You're breaking out somewhere at that level.

The thing to remember is it might hit these points three or four times. But there's your breakout point. That's what the ascending triangle looks like.

The Previous Trend

The previous trend is an uptrend. That means your next trend is also an uptrend as well. That's because it's a continuation pattern.

The Volume

When you want to look at where the stock is going you're always looking at the volume. You want to see strong volume here at the beginning) coming in but then I'll probably die out. That's why we get that pullback. We understand the selling pressure that comes in.

Then again you get more volume usually on these upward movements. Now sometimes as we go into this triangle pattern, the volume actually may decline. As you compare ticks for ticks, so as you look at maybe the closer ticks daily typically the bullish of volume will be higher than the bearish volume.

The trend may decline. That's because you're just consolidating, distributing, waiting and digesting this move. And then what happens is later you'll get that influx of more volume as we break out again. The volume will pick up and start to accelerate on that breakout.

When Do We Look at The Projection?

You're looking at this range between the triangle. I like to look at a little more conservatively. Look at this big range from that swing point to that bottom range of the triangle.

Does it always hit that exact point? No. It's just a guide. Give it about that much, so we move over here (above triangle). It'll probably hit somewhere around that region from the breakout point. You're looking at the big base of the triangle from that rejection to the bottom.

In other words, from the resistance to the support. After that, take that, move it over to where the breakout point is and that's the target arrange. Would I take some profits before I hit the target? Absolutely. If you had a hundred shares take off maybe 70, 80 shares.

Whatever the case may be on your risk management style. But that's what you're looking for when you're looking for the projection.

Entry Points

You don't know if this could be a triple top. A triple top typically will hold support (a little more flat). But this thing could roll over and head down.

Because of that, you need to be careful about this. That's a little tip. Typical entry point if you do get that breakout right there this would be the entry point. It's right after we break out of that resistance level on that triangle.

At times you'll get this to roll back and bounce. That way you could get a second entry there if you miss the move. It doesn't always happen. Sometimes the breakouts are fast. But sometimes you get a pullback, and then you get a bounce. That could give you an excellent entry point as well.

If the stock ends up rolling over and this is sending triangle pattern doesn't work out you could look at a shorting opportunity somewhere over here right under that support level.

That scenario can appear if you get bad economic news or something like that. It's important to look for volume to pick up and where the volume picks up and where the price goes that's where the stock is going to go.

If you're getting the breakout, you'll get a continuation here to the bullish side. You'll want the volume to pick up, but it doesn't always happen. Keep an eye out. That's why your entry point is above the resistance level. That way you can be a little more sure that it doesn't roll over.

That's my thought and inside on the ascending triangle pattern. These are just guidelines of what you're looking for. Here's our resistance level. It could be creating a pattern. If that pattern is created, you're looking for that breakout that could be an entry point.

Remember it could still pull back a bit to retest that resistance level which becomes support once it breaks it. And then your projection or target area is about that range from the fatter part of the triangle. Take that and see how far it can go there.

The Ascending Triangle Pattern With Ticks And Candlesticks

Here you get a little better insight on what it looks like. Here we have HOG or Harley-Davidson from 1991 to 1993. It's a good example because I find that it's spotless and clear cut. The stock was right around $0.5 to $3 a share.

Stock price continued to appreciate there with time strike at the beginning. I find that this pattern works out very well for moving costs to the upside. What happens in 1991 is we got into a resistance level right around the $4 range. You can see those sweet points a couple hit a couple of times.

The stock price also tried to continue to compress into that triangle level. Between four dollars we were hitting that $4 range and then moving back down to $2.5. Then we hit it again at $4 moved back down at $3. Then finally when we hit third time (you could say a double top that broke out), then we finally broke out past that $4 range.

Notice the increase in volume. Yes, it was a minor increase in volume. However, it did pick up and allowed that stock price to continue moving into higher prices with time.

That's the ascending triangle pattern that I find it works very well. But you can see also that sometimes this can confuse you with a double top. That is the place where stocks could roll over. That's why it's crucial for you to pay attention to what's also evolving on the lower range or the support level of the stock. It's also essential looking at when things break out.

Example of American Express

That one hasn't fully evolved or matured yet. But I want to show you one that's developing. Here we have American Express which is 2018-2019 which is very recent to the current time.

As we look at this right around the $104 range in American Express, you can see we're creating resistance right around that $103-$104 levels. It's hitting it maybe four, five or seven different times. As we go from 2018 January to about August time you can also see we go from about $88 to about $100.

The stock price continued to move higher from 2017 to 2018. We got into $104 a share. We pulled back to about $88 a share. Then we got back into $104, and we pulled back to about $92. After that, we got back to $104, and we pulled back to $96. Got back to $104, pulled back to $100.

And then we finally broke out right here at about $104-$105 a share. Now the volume still is not increasing in a big way. It's not an increase in volume on the breakout yet. It could happen, and it could evolve, and more volume could pick up with time. That's because this is the weekly chart. So, it may take a couple more weeks for the volume to pick up.

We'll see with time if this pattern pans out and works out. But you can see that there's a pattern that we're looking at as it's evolving into the future. And we're not sure if it's going to evolve and manifest into a good trading pattern. That's a pattern right there that you can see on the screen that's evolving right now.


You've learned a little more about the ascending triangle. That one is a continuation pattern which means that it continues from the previous trend.

I hope you found it helpful and insightful to learn a little more about technical analysis.

Flag Stock Chart Pattern (Continuation): Technical Analysis Ep 220

January 24th, 2019

Listen to the Podcast

Subscribe to the podcast

iTunes Stitcher

Today we're going to go back to the basics of looking at technical analysis on a flag pattern. Let's take a look at the bullish and the bearish case scenario.

This pattern is a continuation pattern, which means you're continuing into the direction that you left from or came from.

The Case With a Basic Flag Pattern and The Bullish Case Scenario

When it comes to the flag pattern, think of it as a digestion pattern. That's why it's a continuation. It pauses digests and then continues moving forward into that same direction.

If you look at just the movement that we have in the bullish case scenario, we are going from lower prices. Then what happens is these prices eventually stall out. What happens then is it goes a little bit sideways to a retracement.

It creates somewhat of a retracement pattern here for a short bit of time. Here you're consolidating in this little range. And then eventually this will break back out and move into higher prices.

Your flag is right here. It's that pullback segment. The angle could be a little bit different. That means that when we look at the previous trend with flag patterns, the previous trend is always moving in the direction that it's following through.

If you are moving to the upside you get a flag pattern then you'll continue moving to the upside.

The Case With a Basic Flag Pattern and The Bearish Case Scenario

If you're in a bearish case scenario (let's say you're moving to the downside), it will retrace it goes back to that side. This is that retracement, and then they'll continue heading lower.

Look at the volume - bullish case.

If we look at the volume, we have high volume in the initial breakout. And then you'll have lighter volume when you're distributing or moving sideways.

Usually, this is the case. Then eventually you'll get some higher heavier volume moving back to the upside. That's what you're looking for when it comes to volume is you want an increase in volume in the direction that the stock is moving in. They usually go hand-in-hand.

Take a Closer Look at Projections

If I take my hand and we moved about a hand span from the initial breakout to the top of this flag pattern. That's what you'll probably get as well from that breakout point to the top.

Maybe your target area somewhere up high over there. That's usually a projection. But keep in mind if you're looking at bullish patterns sometimes they could continue moving for much longer creating new digestion patterns.

And then again moving into further higher prices. As far as the pattern is concerned that's the projection is from the initial breakout to the top of the flag. You'll probably get that next leg again to the upside. Sometimes it'll be a little bit less because this pattern gets so far extended with the amount of energy and movement.

That's because this is a much shorter compression (much shorter retracement). And if it had a longer retracement, you could move much longer to the upside. But it may not be as quick.

What About Entry Points?

If we're looking at entry points, you'll want to do it right after we break out of the flag pattern. If you miss the flag pattern of course initially, it'd be nice to get in the way at earlier prices.

But that doesn't always work out. In some specific situations if you get a pullback in that flag pattern and you move higher to bounce off of the support or resistance you could go and make an entry point over there. That could be another variation.

Useful Tips You Might Use Right Now

Here're one or two little tips before we go into a bit of detail on the bearish side.This pattern can also move even more sideways. If we move sideways, it can go sideways, and that could work the same for the bear case scenario as well.

That means if we're moving to the bear case you're moving sideways and then further lower prices. That could also be a sideways looking flag pattern. Just keep that in mind that it doesn't necessarily have to retract or pull back at this angle. It may be a little more sideways as well.

It's just digesting the move that was created that was very quick. If we're looking at the bearish case you'll want heavier volume as that stock is selling off. That's where the stock is moving the quickest. Then you'll get a little bit of light volume as we're digesting and again heavier volume on the next leg down.

The entry point will be right where that stock breaks that supporting flag pattern. Sometimes it'll retrace and bounce up and then go down. And that could also be an entry point as well.

That's the flag pattern as far as the basics are concerned. Keep in mind sometimes if they're moving a little more sideways and you think of them like a flag pattern it could be a double top. It could be a double bottom. It's just distribution.

All this is a pausing pattern to the next stage. And that's why when you're looking to get into the stock you want to wait until it breaks out of that pattern. If you miss the initial move, could you do it a little bit earlier and get into the stock and the position earlier? Yeah, absolutely.

You could do that, but then you're risking for it to continue moving in a downward direction if you're looking at a bullish case scenario. Or in a bearish case if you're looking for to short stock and it continues moving higher and reverses, and this becomes a double bottom in a way then it could hurt you and damage you as well. Overall that's the flag pattern and what you're looking for getting in and out of that position.

Real-life Example That Help Can Help You

Welcome to the screen and hear what I'd like to do is show you an example of a flag pattern. This could almost be a pennant pattern as well. Take a look at this GoPro example as we look at the chart the GoPro IPO got released right here.

This was our early initial point. It had a double top right at this point. And then as that stock continued to climb up, you can see we accelerated very quickly with quite a bit of volume. Here's where our flag pattern takes place right here, and if you look there it is it's flagging a little bit.

During that flag pattern, we do have a little decrease in volume. And then, as soon as we break out of that flag pattern, you have an increase in volume. Your entry point would be just right above that flag pattern. You can almost wait until even the top of that flag pattern is cleared to get into the stock.

And you can see you had a nice run a little bit forward into higher prices with this example. Take a look at the next example. Here's another one with Tesla as a little bit of a flag pattern. Again, take a look. We had a run up here in prices, the stock pulled back here slightly and retracement. Then again a nice pop at higher prices was breaking out of that flag.

You can see volumes slowly starting to build. Overall it was just beginning to develop, so it's a little less obvious there on the volume with Tesla. But there was that bit slight small consolidation flag pattern that occurred. And during the breakout, we did have a little more volume.


That's a basic flag pattern example. I hope you found this video helpful. Thanks for joining me and be sure to get on the newsletter list so that way you get notified as I release new videos when we have new books and course that get published.

Pennant Stock Chart Pattern (Continuation) & How to Trade it: Technical Analysis Ep 218

January 10th, 2019

Listen to the Podcast

Subscribe to the podcast

iTunes Stitcher

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:

  1. Bullish side and the bearish side;
  2. What does it look like;
  3. Some of the previous trends;
  4. Volume;
  5. Projections;
  6. Entry point; and
  7. Few tips

When we look at the Pennant Pattern

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.

Previous trend

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.

If you're looking for Projections

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.

If you're looking for entry points

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.

If you take a look at the bearish case scenario

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.

If you're looking for the entry point

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.

As far as tips go

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.

Symmetrical Triangle Stock Chart Pattern: Technical Analysis Ep 216

December 27th, 2018

Listen to the Podcast

Subscribe to the podcast

iTunes Stitcher

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:

  1. What they look like;
  2. Previous trend;
  3. Volume;
  4. Projections;
  5. Entry point; and
  6. A few final tips

Let's start with the bullish scenario

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.

What a Symmetrical Triangle Looks Like

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.

When You Look at Volume

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.

As far as the Projection Goes

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.

If You're Looking for Entry Points

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.

If We're Looking at the Bearish Case Scenario

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.

Rounding Bottom Stock Chart Pattern: Technical Analysis Ep 214

December 13th, 2018

Listen to the Podcast

Subscribe to the podcast

iTunes Stitcher

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.

Rounding Bottom Stock Chart Pattern

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.

If you're looking for a target or a projected move in this

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.

What I want you to remember --

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.

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

Join over 31,258 regular people who are bettering themselves in the stock market.

Click Here to Sign Up!

This is a community that is motivated to learn & improve their skills.
Join us and get free training lessons, freebies, and exclusive promotions.

want some helpful advice?

pay per minute coaching

I am scheduling helpful coaching sessions for people who are interested in real-world advice & guidance where you only pay per session. No long term commitment required.

Learn more
This website and content is for information purposes only as Rise2Learn, TradersFly, and Sasha Evdakov are NOT registered as a securities broker-dealer nor an investment adviser. No information herein is intended as securities brokerage, investment, tax, accounting or legal advice, as an offer or solicitation of an offer to sell or buy, or as an endorsement, recommendation or sponsorship of any company, security or fund. Rise2Learn, TradersFly, and Sasha Evdakov cannot and does not assess, verify or guarantee the adequacy, accuracy or completeness of any information, the suitability or profitability of any particular investment, or the potential value of any investment or informational source. The reader bears responsibility for his/her own investment research and decisions, should seek the advice of a qualified securities professional before making any investment, and investigate and fully understand any and all risks before investing. Rise2Learn, TradersFly, and Sasha Evdakov in no way warrants the solvency, financial condition, or investment advisability of any of the securities mentioned in communications or websites. In addition, Rise2Learn, TradersFly, and Sasha Evdakov accepts no liability whatsoever for any direct or consequential loss arising from any use of this information. This information is not intended to be used as the sole basis of any investment decision, nor should it be construed as advice designed to meet the investment needs of any particular investor. Past performance is not necessarily indicative of future returns.