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Chartreading

Hacking the 2023 Market Recovery with a Symmetrical Triangle Here's an easy chart analysis "hack" to help pick price levels to trade during the (hopefully expected) 2023 market recovery ... .... and ... it's just this, it's a hack - not a prediction and definitely not a trading advice :) In this hack, we make a couple of (bold) assumptions -------------------------------------------------------------------- 1 - that the market has already reached bottom and (just) started moving back up 2 - that this expected move up (for recovery) may take as long as (if not more than) the time it took the market to drop 3 - that - from a zoomed-out view - the drop and the recovery will roughly make up a wide V shape goes without saying, these are big assumptions, and also there are many unknowns that can happen anytime to change or affect these assumptions - in both good or negative ways. that's why i'm referring to this as a "very rough hack" :) -- still thought it was useful to share.. So with these assumptions, we can then use a simple Moving Average (I use the 20SMA here on a weekly chart) and couple of TV drawing tools; 2 rectangles and a diagonal line (or a triangle), to plot a very rough "path to recovery" - as explained in the above chart - the right arm of that inverted symmetrical triangle is the important element we need here - it will represent the "projected recovery path" - of the moving average we selected. for chartists, this is a "golden nugget" ... How is this "hack" useful ? --------------------------------------- - we now have a starting point when designing trades - entries and targets - knowing (at least with some little confidence) that the price will mostly remain above the "projected path" between now and the end of recovery - "mostly" here is a key word :) -- because for the SMA to take that path, the price should print these values (more than values below the SMA) - having that insights can provide a useful edge for technical traders to exploit - beside all the usual analysis, indicators, tools....etc that they use .. Did this work in prior market drops ? ---------------------------------------------- - this hack won't work with the 2020 COVID drop - that drop was so sudden with even a sharper recovery - this method needs more of "smoother drop moves" to become meaningful. - I tested this with the 2008 market drop - which was big and steep - with slow recovery - so somehow similar to the one we're going through now (from a very rough perspective) this is how that test looked like How to use this chart analysis hack ? ------------------------------------------------------- - Use it any way you want - and at your own risk - or do not use it at all - it may or may not work. No one can predict future prices in the market (no matter what some people may claim) - But assuming this can provide some rough guide to the recovery of some of the big names that move consistently with the market (like AAPL, GOOG, MSFT, AMZN, ..etc) - i plan to use the levels provided by this guide to pick best option strikes and expiry to play some long CALLs if this path holds. - for example, if we want to play the 115 long CALL on GOOG, we should consider taking expiry not earlier than early October (or later than that) - as in the below chart Again, please keep in mind that this is a hack - it's not a method of price prediction and not even a sanctioned method of chart analysis :) I'll be super glad if that idea helped inspire some winning trades - let me know in the comments.
CME_MINI:NQ1!Education
by RedKTrader
NASDAQ: Are we there yet? (follow up from previous idea)this is a quick follow up from my previous chart reading using the weekly TF - we hit scenario #2, almost spot-on - market is showing some signs of recovery. we also see some good earnings results that are not (hopefully) being lost back (AMZN, UBER, PINS, even AAPL i consider "good") but - we still not there yet, though if we check the daily chart (below), the lower indicators are showing a lot of "green" signs, and we're above major MA's (50 and 100), the weekly view above still needs to fully recover - the signal i look for is that VADER (on the weekly) needs to show green in both the fast & slow before we consider ourselves in real recovery * what to look for next? --------------------------------- - there are some strong resistance ahead - big confluence zone (marked on the chart) - and even before we get there, the market needs to ease-up and do a re-test, then if the re-test is good, move up, then address the resistance zone .. so we're still few weeks away from recovery .. and when recovery happens, it's gonna be shopping season :) - The Usual Disclaimer: This is just me thinking aloud - please trade safely and do your own thorough analysis. Good luck
CME_MINI:NQ1!
by RedKTrader