Tackle Today: M is for Murder
April 6, 2022
«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
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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?
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