{"id":8074,"date":"2024-11-17T19:39:30","date_gmt":"2024-11-17T19:39:30","guid":{"rendered":"https:\/\/finderica.com\/3-chart-patterns-that-cut-through-the-markets-chaos\/"},"modified":"2024-11-17T19:39:30","modified_gmt":"2024-11-17T19:39:30","slug":"3-chart-patterns-that-cut-through-the-markets-chaos","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=8074","title":{"rendered":"3 Chart Patterns That Cut Through the Market\u2019s Chaos"},"content":{"rendered":"
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Every day when I turn on the computer, one of the first things I do is go through my stock charts. I like it more than a kid likes ice cream.<\/p>\n

The world is full of potential as I view the various setups and consider how I\u2019m going to approach my trading for the day.<\/p>\n

I use technical analysis \u2013 the study of stock charts \u2013 to make sense of all the price data that bombards traders and analysts every second of the trading day.<\/p>\n

Analysts can make technical analysis incredibly complicated, and they often do. There are endless ways of analyzing price data.<\/p>\n

But the truth is, I don\u2019t use 90% of it. What I find most useful when analyzing stock charts is pattern recognition.<\/p>\n

Today, I\u2019ll review three of the patterns that I use regularly in my VIP Trading Research Service Technical Pattern Profits<\/em> to help generate profits no matter which direction the market \u2013 or individual stocks I\u2019m trading \u2013 is headed.<\/p>\n

The \u201cWorld Record Pattern\u201d<\/strong><\/h2>\n

The first is the World Record Pattern, or the bull flag pattern.<\/p>\n

It occurs when a stock makes a sharp move higher (also known as the \u201cflagpole\u201d) and then consolidates for a short period. Once the stock breaks out of that consolidation, it typically moves higher by the same height as the flagpole.<\/p>\n

Here\u2019s a chart of Doximity<\/strong> (NYSE: DOCS) to show you what I mean. In August of this year, the stock jumped from about $26 to $37 in one day, creating a flagpole that was about $11 high. It took a breather for a few days, forming the flag, and then continued higher.<\/p>\n

\"Chart:<\/a><\/p>\n

To figure out a price target, you take the height of the flagpole and add it to the breakout point. In this case, we\u2019d expect the stock to reach $48 ($37 + $11). About two months after Doximity broke out, it reached $45.<\/p>\n

\"Chart:<\/a><\/p>\n

On October 23, I recommended closing the position for a 45% options gain in just 40 days.<\/p>\n

Without a doubt, the breakout of the World Record Pattern is one of the clearest indicators of when a trader should buy\u2026<\/p>\n

But what about when to sell?<\/p>\n

\u201cOld Reliable\u201d<\/strong><\/h2>\n

Old Reliable, or the head and shoulders pattern, is bearish. It\u2019s valuable for taking the emotion out of the decision to sell.<\/p>\n

Old Reliable has been ranked the most consistent chart pattern \u2013 and for good reason. This chart pattern is 83% accurate in predicting a stock\u2019s downward slide.<\/p>\n

It gives you a clear warning sign before your stock begins its dive.<\/p>\n

The head and shoulders pattern features three high points. The second, or the head, is higher than the first, or the left shoulder. But then the third, or the right shoulder, fails to reach the head, and the stock\u2019s trading volume decreases. This suggests that buying interest is drying up.<\/p>\n

Once the stock breaks the \u201cneckline\u201d (the line drawn from the bottom of the left shoulder to the bottom of the right shoulder), it usually slides lower. That means it\u2019s time to sell.<\/p>\n

Here\u2019s this pattern in action on Viatris<\/strong>\u2019 (Nasdaq: VTRS) stock chart. This was a rare occasion in that there were actually two right shoulders, but you can clearly see that the stock continued falling after it broke the neckline.<\/p>\n

\"Chart:<\/a><\/p>\n

\u201cPower Channels\u201d<\/strong><\/h2>\n

To understand Power Channels \u2013 also called ascending channels \u2013 it\u2019s important to understand resistance and support lines.<\/p>\n

These are terms that traders use to describe price levels that act as barriers, preventing the price of the stock from moving outside of a specific trading range.<\/p>\n

The resistance line is generally the price that the stock won\u2019t push above. You can think of it as the \u201cceiling\u201d for the stock. The support line is the floor of the stock\u2019s trading range. It\u2019s the price where traders feel the stock is too cheap, so they start buying again.<\/p>\n

Here\u2019s an example with Taylor Morrison Home Corp.<\/strong> (NYSE: TMHC)\u2026<\/p>\n

On October 24, I sent a notice to my subscribers saying, \u201cThe stock is bouncing off of the bottom of its channel. \u2026 Let\u2019s jump on the stock, expecting it to rise to the top of the channel in the short term.\u201d And then I recommended an option play to go with it.<\/p>\n

\"Chart:<\/a><\/p>\n

This Tuesday, less than three weeks after I recommended the stock, I sent another alert that said, \u201c[The shares have] reached the top of the upward channel\u2026 That\u2019s a good signal to grab our profits and move on.\u201d<\/p>\n

\"Chart:<\/a><\/p>\n

Technical Pattern Profits<\/em> subscribers had a chance to land a 49% gain<\/strong><\/em> in just 19 days on the options.<\/p>\n

Do you see now? Technical analysis isn\u2019t so hard when you know what patterns to look for and you can recognize them when they pop up on a trading screen.<\/p>\n

They\u2019ll help you remove the emotion from investing and give you a better chance to profit regardless of where the market \u2013 or a stock \u2013 is headed.<\/p>\n

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