Tackle Today: I Like Big Bottoms
April 7, 2022
«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.
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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.
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