How to Trade the simple things we know so far

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Trading Trendlines

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The chart of POLYPLEX CORP just denoting how the trendlines are drawn.

The Uptrendlines therefore act as Support,once cracked to the downside,notice how the Downtrendlines act as resistance.

In what way does this knowledge help us in our trading?
We detect a change in downtrend,and we enter the stock,once again using all that we have learnt so far. The trendlines allow us to stay in that trade as long as the trendlines hold.
The moment we get a close below the Uptrendline,we are out. If you are looking to short,wait for a feeble rally towards the former uptrendline.That's an area to short.
Vice versa for the downtrendlines…….Have a look at the 2nd chart of POLYPLEX,self explanatory.

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Trading Pivots

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Pivot identification is crucial to spot a trend and a change in trend.An UPTREND is made up of multiple higher pivot lows and highs,our focus in an uptrend is the PIVOT LOWS.Every time price makes a new high,our stops are raised to the previous pivot low.When a previous pivot low is broken,we say that the uptrend is over.A DOWNTREND is made up of multiple lower pivot highs and lows,our focus here is on the PIVOT HIGHS.Every time price makes a newer low,our stops are brought down to the previous pivot high.When a previous pivot high is broken,we say that the particular downtrend is over.

Trading Pivots is the root and core of the Flow Trades that we will look into later.For now,a break in previous uptrend gives us a chance to go short and capitalise on the ensuing downtrend.A break in the previous uptrend signals us to go long and capitalise on the coming uptrend.


Trading the Rising Wedge

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Trading the WRB—Breakout

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In all these cases,the WRB is a breakout bar/candle from a consolidation.This particular bar needs to have its open very near its lows,and its close near to its highs,and as the name suggests,a much wider range as compared to the bars preceeding it.The tactic is to buy over the high of the WRB with the stop near its lows.Another way if the range is too huge and stops are too far off is to put the stops just below the midpoint of the WRB.


Trading the WRB — Failure

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The chart shows both a trade off the WRB Breakout and ending in a WRB Breakout Bar Failure.How we tackle a WRB after a prolonged uptrend is as follows.Note that this is not a continuous rally within the uptrend ending in WRB's.That is another pattern.Here,price has put in a decline within the uptrend,and then broken out with a WRB.Stops as always at pivot lows can be raised to the midpoint of that bar or a bit more conservatively,to the 33% mark of that bar.Maximum,giving conservativeness a stretch,stops below the low of the WRB.

A Breakout WRB Failure can be as juicy as a simple WRB Breakout.Profit potential is huge as Bulls refuse to believe that this particular trend is over and enter into Denial Phase,and when they come around,a huge wave of selling ensues to ease their pain breaking pivots et al as price hurtles into a downtrend.


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