Released 8/3/2021.
Below is a slider quiz to test your trading ability. Captions appear below the pictures for guidance, so be sure to scroll down far enough to read them.
1 / 4
What chart patterns can you find? Look for the following (if you find others, great!): Rising wedge, falling wedge, descending broadening wedge, descending triangle, broadening bottom,
right-angled and ascending broadening formation.
Answers are on the next slide.
2 / 4
Imagine that you own this stock. How do you decide when to sell? That's a tough call when there's no chart patterns to call the top. That may mean the top has not been reached yet,
but more likely it means that price has reversed without creating a pattern you recognize
Do you sell this stock now?
See the next slide for one answer.
3 / 4
Victor Sperandeo in his book, Trader Vic - Methods of a Wall Street Master describes his trend change method which I call the 1-2-3 trend change. My books
Trading Classic Chart Patterns
and Getting Started in Chart Patterns, Second Edition
discuss the method at length. Here's a brief review.
Draw a trendline from the lowest low to the highest high on the chart such that the line doesn't pass through prices until AFTER it reaches the high. I show this line in red in the
above chart.
Step 1: Price closes below the trendline (point 1)
Step 2: Price retests the high. Sometimes it exceeds the prior high but most times, as in this case, it doesn't. The high is 2A and the retest is point 2.
Step 3: Price drops below the minor low (valley) between the two peaks, 2A and 2.
After all three steps occur, price has changed trend and it's time to sell a long position or consider going short.
The next slide shows what happened to the stock.
4 / 4
Price completed the 1-2-3 trend change and formed a rounding turn. After that, price moved up in a straight-line run and formed higher highs. Price at A reached a high of 26.85
and the low at B was 21.19, a decline of 21%, which qualifies as a trend change (20% is the minimum).
The End.
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