Once you understand price action, markets open to you
Trading concepts can be applied across many markets
Question: Can you spot any familiar price action/ chart patterns in these two charts?
Recurring chart patterns with high probability outcomes
First chart: Intel Corporation (INTC)
- Head and shoulders pattern with right shoulder predicted by equidistant channel.
- These concepts of A) potential bearish reversal and B) equidistant channel were previously discussed here and here.
- Head and shoulders have near-perfect symmetries that are easy to detect.
- Patterns on weekly charts are considered significant and would be keenly followed by big players.
- The pattern is confirmed when ‘neckline’ is broken.
Second chart: Avago Technologies (AVGO)
- This stock was discussed during BP class.
- AVGO is a home grown tech company.
- Stock price consolidated for 2 years before breaking out of $40 high.
- Price is now >3x higher at 142 a mere 2 years later.
- We covered the concept of consolidation – breakout in this post.
Challenge to individual traders
Step #1 of your mission is to master a set of skills namely recognising price action, understanding market psychology, evaluating risk – reward and knowing when to commit to action.
Step #2 of your mission – extend your tentacles EVERYWHERE!
Achievement? Acquiring an ‘ATM card’ that has withdrawal limit capped only by your imagination, determination and daring. The rest is up to you.