A Great Trading Strategy for Trading Against the Trend
Stocks and ETFs get overbought (excessive greed) or oversold (excessive fear), but those terms are not tradable patterns or trading strategies.
Being overbought or oversold does not mean to short/buy since prices can get more overbought or oversold because of human emotions of greed and fear.
The video below teaches how to trade Master Trader Climactic Buy Setups with an MTS Price Pattern, entry methodology, and management.
A climactic setup signals that prices are extended in one direction. That extension creates a price Void between support and resistance where prices can retrace.
The Climactic pattern is considered a Swing Trading setup, but intraday traders can use climactic patterns in a shorter timeframe.
Common Sense Technical Analysis Simplifies Trading Strategies
Master Trader Technical Strategies (MTS) foundational concepts are built on an indisputable fact.
All chart price patterns -- in any tradable instrument -- are a picture of human emotions and beliefs created with money.
MTS also utilizes Multiple Time Frames (MTF) combined with other technical analysis concepts like the trend, support, and resistance concepts to form a strategy.
All Technical Concepts are Universal to All Time Frames.
For example, support and resistance form in all time frames and can be reacted to in the timeframe being viewed.
A foundational technical analysis concept is that the trend, support, and resistance will be more significant in a higher timeframe than in a shorter one.
So, prices trending lower in a higher timeframe have a high probability of trading through support in the lower timeframe.
However, that doesn't mean that prices will not retrace higher if they become extended lower. And that is the essence of a Climactic Buy Setup (CBS).
Ideally, a Climactic Buy Setup will form at an area of prior support.
Not every setup will form this way, but the more aligned technical concepts, the greater the probability of a trade working when a pattern forms.
Climactic Buy Setups are Not Long-Term Bottom Patterns
The CBS is a V-Bottom. It will typically form with one-to-three bars forming the reversal.
A climactic pattern displays high emotion because of the extreme move followed by an abrupt turn and reversal.
The reversal can form in multiple ways; we don't have to know exactly.
You don't have to know exactly using the MTS concept of Bar-by-Bar Analysis.
Using Bar-by-Bar Analysis with the climactic setup, however, the pattern may form -- you will know what it means and when to act.
What Trading Vehicle Should be Used to Profit from the Setup?
The easiest vehicle to use is to buy the underlying instrument.
That can be a stock, ETF, or Futures contract.
If you are knowledgeable in Directional Options Strategies - and the options are liquid, using call options with the appropriate strikes and time to expiration is fine.
Let's Look at Some Examples in the Video and Continue the Education.
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