To the bulls, Boeing looks like it may have bottomed with an ascending triangle formation. To the bears, it looks like Boeing reached the top of a bear flag. There is no way on knowing who is right, but this is how to trade it.
Bear flags are essentially ascending triangle breakouts that fail. When an ascending triangle breakout fails, bulls become disheartened and are likely to bail on their long as soon as the supporting trend line breaks (pink).
Bears sold today when the price hit the red line, which would be the upper part of a potential bear flag. You might be asking yourself, how could they sell on the red trend line when it didn't exist until today? Some say you cannot draw a trend line off only 1 point, and they are wrong. So where did this trend line come from?
Simple, copy the pink trend line and paste it directly on the local high. You will see that this forms a perfect bear flag and a great place to take profit / sell. A lot of experienced traders use this method to create trend lines from only 1 point and I know first hand that it's a very profitable strategy for finding amazing areas to take profit and short.
Did you miss out on the Boeing move today? No worries, here are three areas to enter a long.
1. You can wait for the price to come back down to test the ascending triangle breakout (blue support line, red star).
2. You can also buy on the pink trend line (green star) if price happens to drop that low.
3. There is 1 more trick to ascending triangles that many people do not know about (see my example above). Sometimes they are not perfect patterns, but the stay intact even if the pink line breaks. If price fails to make a new low, you can buy at the pink star in hopes for a double bottom. Ascending triangles signal that people are buying the dip, and if price bottoms at the previous low, this means they are still buying the dip.
Personally, ascending triangles are my favorite patterns to trade because the buy points are flat or ascending, making it easy to set a reasonable stop loss. It is also the most common pattern I see on strong trending stocks, on all time frames. You'll see them on the monthly chart as well as the 30 second chart. They simply signal that people are buying the dip and becoming more impatient with each drop, that is why the dip becomes less and less until it eventually breaks out the top from all of the buying pressure thanks to impatient buyers.
Hope you enjoyed this analysis and tutorial. Please like and subscribe and I'll add more!
How would you adjust your chart & technical analysis to explain or describe today's price action in the stock. Currently trading after hours @ ~$238.00? Thanking you in advance. Curious to hear how it would fit into a chart dynamic &/or modification of this recently posted chart & analysis. Thanks again, DK
ttrending
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@DraftKing, It's really bullish right now but it gave a very solid entry today it tested the previous session's high. The current pattern seems to be an ascending triangle with bulls buying the dip. I'd wait for a breakout above or a retest of this new ascending triangle before buying.
DraftKing
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@ttrending, So in AFTER HOURS trading it's currently traded 2M+ (an EASY 1+Mill more than "heavier" after-hours trading) & is UP TO ~$238 which is ABOVE the ascending triangle in your chart. Since THIS is a BRAND NEW chart, & not a triangle ABOVE the previous, are you saying the previous "thesis" (for lack of a better term) doesn't really fit & so it must be abandoned? Thanking you in advance... PS: I'm guessing there may be GAP TESTS @ $250 & $301 in the chart & SINCE there was hardly ANY TRADING in the actual post-Covid $400+ previous all-time highs, that there should NOT be much overhang (sans profit-taking from below).... But I'm NOT sure how to really chart a technical picture of what's going on here. Sans doing it the way that you have here today. Thanks again for anything you might care to add...
FinoptUSA
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Very good analysis. I agree with your thesis.
Refahferdushi
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Good idea,,,
icewatert
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I appreciate your tutorial! This is really good information. Thank you for taking the time.