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A well defined risk...

Oct 6, 2019

A well defined risk...

Here's the Crude Oil (WTI) daily chart. As you can see, since mid January 2019, whenever the price falls off to the $50.50-$51.50 area (orange), there is overwhelming demand around that level to push the price higher. On Thursday, the price approached that level again, bounced, and closed the day near where it opened. This created a bullish pin bar, also known as "hammer" for the japanese candlesticks aficionados. The next day (Friday) was a bullish (green, up) day, eventhoug

Interesting across time frames

Sep 24, 2019

Interesting across time frames

Today, let's look at what is called "time frame continuity". It basically means that we want to see the price moving in the same direction across various time frames. The most common times frames are monthly, weekly and daily. Let's start with the longer term and then move towards the shorter ones. Here's the monthly chart of International Game Technology ($IGT). The old resistance (red arrow) has now become support (blue arrows) on multiple occasion. Right now, being one of

A Textbook breakout

Sep 3, 2018

A Textbook breakout

Here's an interesting setup: Quinstreet ($QNST) broke-out of its resistance area (orange rectangle) on high volume (3x the 50-day average - blue arrow). The price pulled back to its breakout level, confirming that the old resistance becomes the new support, on low volume (less than the 50-day average - red arrow), with momentum straying in a bullish range. Now, the price needs to bounce off this area and start a new uptrend to be a complete textbook breakout. If QNST is able

Risk Reward Ratio

Dec 16, 2017

Risk Reward Ratio

Wonder how to calculate a risk reward ratio? Here's a good example with $NOW (ServiceNow) to go through step by step, first on the weekly chart, then we'll zoom into the daily chart. The weekly chart shows a nice uptrend since February 2016. While the last few weeks were consolidating near the 161.8 Fibonacci extension, last week had a nice hammer testing the trend lines followed by this week's bullish candle. The RSI is also in a bullish range, although slightly overbought b