«Here’s what they look like.»
Enough with the depressing topic of uptrends topping and profit-giving ascents dying. Let’s talk bottoms.
The only downtrends that last forever are the rare few that usher a bankrupt company to its grave. All other descents eventually carve out a low and reverse into uptrends.
Similar to the recent message on spotting a top, there are recurring patterns that play out when stock prices trough. Indeed, these bottoming signs mirror the same six that mark a top.
- Slowing momentum or compression in the distance between pivot lows.
- A double bottom or “W” pattern.
- An inverted head and shoulders pattern formed by a higher pivot low.
- Breaking horizontal resistance zones to form a higher pivot high. This usually completes and confirms the previous two patterns.
- Breaking longer-term moving averages such as the 50-day.
- A kiss hello that arrives as a higher pivot low after breaking resistance.
I listed them in chronological order to provide a sense of how bottoms progress. You don’t always see all six.
It’s also worth noting that you often see multiple failed attempts to bottom before an actual low is found.
This is why many veterans refuse to buy during the bottoming process and instead wait for a new uptrend to be well-established before playing.
🛑 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: Jedi Options: Bear Put Spread on $ARKK
In today’s Jedi Options, Coach Tyler explains a Bear Put Spread on $ARKK.
Chart of the Day: Pinterest Tries to Bottom ($PINS)
The recent bottoming attempt in $PINS stock illustrates many classic bottoming signs.
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.
Cashflow Club 8:30 PM EST
Held every Thursday before Friday’s option contract expirations, this show helps you perfect your favorite cashflow strategies.
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.
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.
