«Because it kills the uptrend.»
Traders,
Yesterday we highlighted the six common signs that an uptrend is topping. Arguably the most recognizable of the bunch is the double top pattern. It looks like the letter “M” and signals a shift in power from bulls to bears. Let’s break it down.
Recall that uptrends are comprised of higher pivot highs. To form a higher pivot high requires breaking above the previous peak. It’s a feat only accomplished when a stock has the wind at its back and bulls are pressing their advantage.
But what happens if prices fail at the prior peak? An equal pivot high forms. It signals a failure of buyers to continue the uptrend. It also signals that upside momentum has stalled, that bears are putting up a fight at resistance and are winning. Not all double tops result in a massive downtrend. Some simply reveal a momentum shift from up to sideways.
For the uptrend to fully reverse requires a break of support. Ultimately, that is what completes and confirms the M pattern.
🛑 Upcoming Webinar › Technical Analysis 101: The Art of the Reversal with Coach Matt Justice | April 11th at 8:30 PM EST on YouTube
Join Tackle Trading on the next Technical Analysis webinar where Coach Matt Justice is going to take a deep dive into how price trends reverse. It’s called The Art of the Reversal. You will learn everything you need to know about how to spot, analyze, and trade the various reversal patterns that end (and begin!) trends.
✅ Read the blog here.
✅ Get the FREE e-book here.
Video of the Day: Queen’s Court: Trade Triggers
On today’s Queen’s Court, coaches Emily and Matt have a discussion on Trade Triggers.
Chart of the Day: Two Netflix Tops ($NFLX)
In 2018, Netflix formed two double top patterns. The first one (orange) was never completed, but the second one (blue) did. Notice how the support break after the twin peaks made all the difference.
Today’s line up
Traders Lounge 11 AM EST
Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.
The Coaches Show Replay
If you missed last night’s episode where Coaches Frank Martin and Greg Holmes talked about Top-Down Analysis or would like to watch it again, check it out here.
Halftime Report 12:30 PM EST
The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day, and fun in a way that only Matt and Tim can deliver.
Trade Masters 7:00 PM EST
Every Wednesday at 7 PM EST join us on the Trade Masters where two Coaches go head-to-head to see who can find the best trading setup.
Trading Justice 470: Moving Averages
In this episode of the podcast, Matt & Mark Justice discuss the importance of moving averages in the feature presentation:
- What are moving averages?
- Why are they important?
- How do traders use moving averages?
Financial freedom is a journey
Sign up now and gain unfettered access to all of the quality content and powerful Scouting Reports that our Pro Members enjoy for 15-days absolutely free with no strings attached and let us show you what your trading has been missing.
Legal Disclaimer
Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.
All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.
