Technical Analysis for Risk Analysis
Technical Analysis should be used for Risk Analysis, not just for deciding if and when to buy whatever it is you want to trade, whether it's stocks, crypto, forex, indexes, ETFs, REITs, mutual funds, etc.
When you know the technical patterns that point to higher risk, aka sellers gaining traction, you can get out of long positions before the retail crowd and its small fund managers react late to earnings reports.
It is NEVER the largest institutions, who we call the Dark Pools, who are selling on earnings announcements. It is ALWAYS the less informed who buy or sell on big news days.
This is what we at TechniTrader call "Relational Technical Analysis"--the application of what we know about the market participant groups to discern who is doing what in the technical patterns of a chart.
For example: UPST was a struggling IPO anyway. The typical IPO top and drop occurred in October-November. 99% of new IPOs do this. Learn to sell at the peak of a speculative new IPO. That means you must learn what speculation looks like in the charts and how to recognize the top developing so you can get out before the drop.
But today's lesson is about the specific set of negative technical patterns developing ahead of Upstart's earnings report yesterday after the market close:
1. A trading range was developing lower highs and lower lows.
2. Compression of price at the low end of the range.
3. Declining Accumulation/Distribution over the sideways action of the trading range.
These are what we at TechniTrader call the "footprints" of controlled rotation out of the stock ahead of the earnings press release date.
Please like and follow if you learned something new. Learn more at my website.
When you know the technical patterns that point to higher risk, aka sellers gaining traction, you can get out of long positions before the retail crowd and its small fund managers react late to earnings reports.
It is NEVER the largest institutions, who we call the Dark Pools, who are selling on earnings announcements. It is ALWAYS the less informed who buy or sell on big news days.
This is what we at TechniTrader call "Relational Technical Analysis"--the application of what we know about the market participant groups to discern who is doing what in the technical patterns of a chart.
For example: UPST was a struggling IPO anyway. The typical IPO top and drop occurred in October-November. 99% of new IPOs do this. Learn to sell at the peak of a speculative new IPO. That means you must learn what speculation looks like in the charts and how to recognize the top developing so you can get out before the drop.
But today's lesson is about the specific set of negative technical patterns developing ahead of Upstart's earnings report yesterday after the market close:
1. A trading range was developing lower highs and lower lows.
2. Compression of price at the low end of the range.
3. Declining Accumulation/Distribution over the sideways action of the trading range.
These are what we at TechniTrader call the "footprints" of controlled rotation out of the stock ahead of the earnings press release date.
Please like and follow if you learned something new. Learn more at my website.
Martha Stokes, CMT
ttrader.im/tv-candlesticks
Learn how to use the technical patterns of each market participant for better trade planning.
ttrader.im/tv-candlesticks
Learn how to use the technical patterns of each market participant for better trade planning.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.