≈ A common setup in charts this week ≈
The last week of price action has been interesting, to say the least. Markets have been bullish for months, without any significant sell-off, until last Thursday where prices fell between 4-6% across major indexes. This created a 3 red candle pattern on the S&P 500 for the first time since mid-March.
What was the catalyst? Lots of finger pointing went to the Fed’s policy statement, Re-opening risk from Covid-19 infections, and general overbought conditions.
Now, the market has rallied on Monday to start the week and is up strong in early action Tuesday to nearly erase the losses from Thursday’s sell-off.
When price, in a bullish uptrend, comes back into key technical levels like rising moving averages, support/resistance zones, trend lines and Fibonacci levels we call those technical catalysts.
Technical Catalysts are one of the 6 criteria we use in the STEP System to score the Bullish Retracement pattern. All 6 criteria include:
- Must have a Bullish Uptrend
- Must be a Liquid Tradable Instrument
- Must have a Corrective Retracement
- Must have a Technical Catalyst
- Must have a Signal Candle (for setup)
- Must have a Confirmation Candle (for entry)
There were many Bullish Retracement setups across the market the past few days, some of them confirming and tradable. Were you prepared to take advantage of the price action?
If you don’t yet know how to trade the Bullish Retracement, the best thing to do is to focus on education, take the STEP System Course, review content on Tackle Trading and show up to the live webinars and participate with the coaches to get yourself trained.
Successful trading requires proper education, proper preparation, and then proper execution. When thing line up well, it is a beautiful sight to see. Make it a goal to develop your rules clearly, on how to trade all four core patterns, and build your routines so that you can run your trading business effectively on a day by day basis.
This last week in the market goes to show us, you need to be ready, because we don’t get to determine when and how price develops into what patterns. We simply can identify the setups, prepare to trade them, and execute when they give us proper entry points.
Chart of the Day
RCL Daily Chart
Royal Caribbean has developed a Bullish Reversal trend, and recently the retracement in price has brought it back into a technical catalyst with a good setup. It was featured over this past weekend on our Stock Report. In the chart above, you see the ETF SPY with a 5 minute, 1 hour, Daily and Weekly candle chart setup.
Video of the Day
Should I Buy Out of the Money Call Options?
The temptation to buy out of the money options is seductive for new traders, because it is possible to hit the occasional home run. But there are some very important rules for buying OTM call options that one must understand if they don’t want to waste their money buying low probability options and lottery tickets. Watch this video to understand the Pro’s and Cons and rules for buying OTM options.In this video, Coach Noah shows you exactly how to do a multiple time frame analysis on a swing trading.A look at how to determine the MMM or the expected move for a stock on earnings.
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 8:30 PM EST
This is our weekly MasterMind group. Join the coaches tonight, 8:30pm EST to discuss the markets and help you prepare for the week.
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.
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