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Hacking the 2023 Market Recovery with a Symmetrical Triangle Here's an easy chart analysis "hack" to help pick price levels to trade during the (hopefully expected) 2023 market recovery ... .... and ... it's just this, it's a hack - not a prediction and definitely not a trading advice :) In this hack, we make a couple of (bold) assumptions -------------------------------------------------------------------- 1 - that the market has already reached bottom and (just) started moving back up 2 - that this expected move up (for recovery) may take as long as (if not more than) the time it took the market to drop 3 - that - from a zoomed-out view - the drop and the recovery will roughly make up a wide V shape goes without saying, these are big assumptions, and also there are many unknowns that can happen anytime to change or affect these assumptions - in both good or negative ways. that's why i'm referring to this as a "very rough hack" :) -- still thought it was useful to share.. So with these assumptions, we can then use a simple Moving Average (I use the 20SMA here on a weekly chart) and couple of TV drawing tools; 2 rectangles and a diagonal line (or a triangle), to plot a very rough "path to recovery" - as explained in the above chart - the right arm of that inverted symmetrical triangle is the important element we need here - it will represent the "projected recovery path" - of the moving average we selected. for chartists, this is a "golden nugget" ... How is this "hack" useful ? --------------------------------------- - we now have a starting point when designing trades - entries and targets - knowing (at least with some little confidence) that the price will mostly remain above the "projected path" between now and the end of recovery - "mostly" here is a key word :) -- because for the SMA to take that path, the price should print these values (more than values below the SMA) - having that insights can provide a useful edge for technical traders to exploit - beside all the usual analysis, indicators, tools....etc that they use .. Did this work in prior market drops ? ---------------------------------------------- - this hack won't work with the 2020 COVID drop - that drop was so sudden with even a sharper recovery - this method needs more of "smoother drop moves" to become meaningful. - I tested this with the 2008 market drop - which was big and steep - with slow recovery - so somehow similar to the one we're going through now (from a very rough perspective) this is how that test looked like How to use this chart analysis hack ? ------------------------------------------------------- - Use it any way you want - and at your own risk - or do not use it at all - it may or may not work. No one can predict future prices in the market (no matter what some people may claim) - But assuming this can provide some rough guide to the recovery of some of the big names that move consistently with the market (like AAPL, GOOG, MSFT, AMZN, ..etc) - i plan to use the levels provided by this guide to pick best option strikes and expiry to play some long CALLs if this path holds. - for example, if we want to play the 115 long CALL on GOOG, we should consider taking expiry not earlier than early October (or later than that) - as in the below chart Again, please keep in mind that this is a hack - it's not a method of price prediction and not even a sanctioned method of chart analysis :) I'll be super glad if that idea helped inspire some winning trades - let me know in the comments.
CME_MINI:NQ1!Education
by RedKTrader
NASDAQ: Are we there yet? (follow up from previous idea)this is a quick follow up from my previous chart reading using the weekly TF - we hit scenario #2, almost spot-on - market is showing some signs of recovery. we also see some good earnings results that are not (hopefully) being lost back (AMZN, UBER, PINS, even AAPL i consider "good") but - we still not there yet, though if we check the daily chart (below), the lower indicators are showing a lot of "green" signs, and we're above major MA's (50 and 100), the weekly view above still needs to fully recover - the signal i look for is that VADER (on the weekly) needs to show green in both the fast & slow before we consider ourselves in real recovery * what to look for next? --------------------------------- - there are some strong resistance ahead - big confluence zone (marked on the chart) - and even before we get there, the market needs to ease-up and do a re-test, then if the re-test is good, move up, then address the resistance zone .. so we're still few weeks away from recovery .. and when recovery happens, it's gonna be shopping season :) - The Usual Disclaimer: This is just me thinking aloud - please trade safely and do your own thorough analysis. Good luck
CME_MINI:NQ1!
by RedKTrader
NASDAQ Monthly View: Are these the scenarios we should expect?Been a while since i posted a chart reading. so here's a fresh one - with a question at the end... cause honestly, i don't know :) This is an interesting view of the NASDAQ - using a monthly chart of the NQ1! - showing the market action since the famous 2008 drop - with an attempt to find some sort of a trend or logic to how the market moved along the years. During the COVID drop back in 2020, the market gave up enough signs that allowed many traders to get out of market before the drop, then come back in at the lows. in contrast, this time, the drop was somehow less expected - quick rise in inflation, new COVID waves with renewed lock downs, supply chain issues , and a strong geopolitical storm and war breaking out - Similar to some other traders, i got caught while i was fully "in the market" this time with a portfolio of mainly tech stocks that started dropping faster than traders could react or hedge. so the wise thing to do is .... you guessed it, hold on to your seat and keep you head low :) the question i'm trying to "think aloud" about here is, where is the recovery to be expected this time? (How long do i need to "sit on my hands" :) ? ) this view looks at a 12-year history with the 2 major market drops - it shows 3 possible recovery scenarios - Scenario #1: recovery around the $12,300 level -- that's the post-COVID resistance-turned-support level - Scenario #2: recovery around the $11,000 level -- that was the first post-COVID support level and if we breach both these 2 possible support levels, the next (our worst case scenario) is - Scenario #3: recovery around the $9,700 level -- that's the pre-COVID market high we're already > 20% drop from the highs - the monthly and weekly views show that in spite of recent signs of a possible recovery, there's still a lot of weakness and volatility to come .. a lot of patience and calm are needed as we still have some bad weather ahead.. i'm curious to learn from the past and see what the charts tell us, and also check in with fellow traders who also got caught in a similar situation. which scenario do you think may unfold, and why ? do you see other possible recovery scenarios ? my guess is, we'll get our answer between August and December .. but it's an interesting exercise.. all ideas are welcome. please feel free to share your views and comments. and please trade safely. Edit: Here's the chart without the lower indicator panes for a clearer view
CME_MINI:NQ1!
by RedKTrader
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