Grab Explosive Gains With This Chart Pattern
The Dynamic Wealth Report
October 7, 2009
by Justin Bennett, Editor
In the stock market, we’re constantly looking for opportunities to make
money.
When you think about it, every second of every trading day is an
opportunity to buy or sell a stock. You could just buy a stock without
doing any research. Just pick a stock and buy it. Entering blindly with
no plan to take profits or control losses. The odds of success for this
trade would be 50/50, basically the flip of a coin. In other words, it’s
completely random.
Obviously, this is a less than stellar way to invest your hard earned
money. As we touched on in a recent article, you want to have an
edge. An edge is a statistical advantage over the market.
You may ask, “Well, where can I get one of those edges?”
One way is through Technical Analysis (TA).
Let’s start out by saying that TA is the art of analyzing the price
patterns of stock charts. You see, the collective behavior of all the
participants in a particular market can be seen by looking at a chart. These behaviors can form patterns that repeat themselves with
statistical reliability. By searching for these patterns, we can find our
edge.
Whew…. that was a mouthful. Don’t let all that technical language scare
you. I’m going to simplify it so everybody can understand.
-------------Sponsor-------------
Where Can You Turn $300 Into $1.3 Million Right Now?
Our own small-company specialist, Robert Morris, has found a
way to 'sniff out' tiny penny stocks on the verge of a major breakout. And
the timing for this has never been better.
You see, the system takes advantage of an obscure SEC regulation that
sends penny stock prices through the roof.
We've seen some stocks gain 852%... 5,450%... even 17,496% in no time
flat.
Click here
for the details...
-----------------------------------
Here’s an example of a recent trade I made…
This is the
StreetTRACKS Gold ETF (GLD). It’s an ETF tracking the
movement of the gold market. You can buy and sell GLD just like you can
a stock.
It’s a great example of a triangle. Take a look at the trendlines.
Notice how the lower trendline comes up and meets the upper trendline,
forming two sides of a triangle.
Each time gold sells off between February '09 and September '09 the
resulting sell off gets weaker. Sellers can’t take the price of gold
down farther than they did the last time.
Also, each buying spree doesn’t get as high as the last one. Buyers show
less interest as time goes on. GLD consolidates into a tighter and
tighter price range.
A point is reached when the pattern gets wound so tight it explodes out
of the triangle.
Take a look at the green circle. This is exactly what happened in
September of this year.
GLD broke out of the triangle and went up 5 points in a matter of days. The entry for the trade would be the $94.50 area, when GLD broke above
the upper trendline.
You would set a stop loss just below the lower trendline around the
$91.80 area. Just in case the breakout failed and GLD fell back down.
I’m still holding this GLD trade for further gains…
Let’s look at a current triangle setup…
This is the
DB Commodities Tracking Index Fund (DBC). DBC is a commodity
ETF representing important global commodities - crude oil, gold, corn, and
wheat to name a few.
We have two trendlines coming together to form two sides of a triangle.
The entry for this trade would be a break above $22.75 on strong volume.
This would take DBC above the upper trendline. You would set a stop loss
at $20.90. In case the trade doesn’t work, you want to keep your losses
small.
The next strong resistance zone in DBC is $24. You should take profits
when it reaches that level. I suspect DBC will test this level (and
higher) if DBC breaks out of the triangle.
So there you have it. This is just one of the many ways to profit from
the markets using Technical Analysis.
By scanning the markets for these patterns, you can find many different
ways to capture an “edge”. By trading with an edge, you can improve your
trading results and make more money!
• Gold (Over $1,030 an ounce)
Gold is breaking to new all time highs above $1,030. However, gold would
have to rocket to $2,300 an ounce to beat its inflation adjusted high of
$850 back in 1980. So the question is… Is gold overvalued or
under-valued?
Print
Page
Bookmark Us
Home | Whitelist Us |
Terms of Use |
Privacy Policy |
Contact Us | Security |
Site Map