Happy New Year!
Our first lesson for 2020 will be on Breakouts because subscribers sent us two trade ideas from others which we disagree with.
At Master Trader, we teach that less is more when it comes to your charting to make money in the markets.
Candlestick Patterns are an excellent start to creating a technical analysis trading strategy. However, candlestick analysis alone is not a complete strategy.
For example, the addition of trend direction and the location of a candle reversal will increase your odds of a successful trade exponentially.
To increase the odds overwhelming in our favor, a Master Trader will look for candlestick patterns that have Multiple Time Frame (MTF) alignment as well.
Master Trader Tip: Align multiple technical concepts with proper position and money management for great trades in 2020!
Regardless of the market environment, we find compelling patterns with alignment on MTFs for directional stock and options trading and investing ideas.
How we accomplish that is with the cool scans that we've created and some time spent simply doing a review of the stocks in those scans.
We do this with the use of simple chart analysis, and so can you.
Here are the proper patterns for Breakouts and Breakdowns:
Below is a daily chart of Eli Lilly and Company (LLY):
Ever since the Breakdown Failure (i.e., Downside Shakeout) last October, LLY has shown bullish price action. LLY had a -Gap Breakdown and, at the low, was a Bearish Wide Range Bar (-WRB).
However, it closed above its open with a bullish Bottoming Tail (BT), on +Vol. That “shook out” a lot of the longs.
It then fully negated the -Gap and broke out! After a bullish multi-week consolidation, it broke out again — strength!
It then retraced with two correction bars, with the trigger bar being over the BT bar at the r20-MA. That was the “no-brainer” long entry for a large target with a big Price Void (i.e., insignificant resistance to the left) on the daily and weekly charts.
There were multiple acceptable reward-risk areas to purchase LLY on a Breakout; however, recommending it NOW as a breakout, having rallied for over 10 weeks with no significant support below is a very poor odds setup.
Below is a daily chart of iShares Russell 2000 ETF (IWM):
Another subscriber forwarded us this trade idea recommended by another service. They claim that IWM is a compelling breakout setup.
Although it is in an uptrend and looks higher on the monthly chart, it is NOT a Breakout setup. It is also overbought short term, having rallied for almost three months from the October low where we recommended it to our subscribers.
Master Trader hopes that one of your goals for 2020 is to ONLY follow a systematic, objective approach to trading and investing like ours — and not get caught up with the plethora of Hocus Pocus so-called proprietary, misleading, non-sense indicators !
You will learn all the concepts to objectively read price action of anything that moves in the Master Trader Swing Trading course and the Master Trader Advanced Technical Strategies (MTS) course.
This is done without the use of indicators, trendlines, Fibonacci retracements or other indicators, which makes it so much easier.
Access the End of Year Specials for Courses and Memberships HERE
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