Today, we will look at Master Card, a key name in the information & technology sector, with a market cap of 375B. As a comparative thing, VISA has a market cap of 484B
So, what are the main technical elements we can observe here?
1) The price has been inside a massive daily correction of 275 days, and a few weeks ago, we observed the breakout of it.
2) Now, we can observe a clear "throwback" (name to define the retest movement after a breakout on a bullish trend) that has been developing on the last 15 days
One of the fundamental aspects of the way we trade is understanding the current context and comparing it with historical data (that's why I love using the logarithmic chart)
As you can see, this is not the first time we have observed a correction of this size, and this has been a common behavior since 2007.
What's my conclusion on this?
Take all those corrections I have shown you in the Log chart, and check this concept "Drawing the corrections in the same way I'm doing it on the main chart of this post" after we have the breakout and the throwback, on average, trading on a new high its a great level to get exposure to a possible bullish movement. Of course, this is not working in all of them, but I can see an edge that I need to polish a little more before defining my final setup. (For this basic test I conducted, I placed stop losses below the throwback)
What if this keeps falling? Then you don't trade
What happens if you trade this and it's a stop loss? That's always a chance, to be precise, 50% of the time that happens to me, so make sure you control your risk (The general concept is 1% risk per setup) and only trade if your risk to reward ratio is equal to or higher than 1.8
Thanks for reading; I hope this was useful, and feel free to share your view and chart in the comments! Thanks.
So, what are the main technical elements we can observe here?
1) The price has been inside a massive daily correction of 275 days, and a few weeks ago, we observed the breakout of it.
2) Now, we can observe a clear "throwback" (name to define the retest movement after a breakout on a bullish trend) that has been developing on the last 15 days
One of the fundamental aspects of the way we trade is understanding the current context and comparing it with historical data (that's why I love using the logarithmic chart)
What's my conclusion on this?
Take all those corrections I have shown you in the Log chart, and check this concept "Drawing the corrections in the same way I'm doing it on the main chart of this post" after we have the breakout and the throwback, on average, trading on a new high its a great level to get exposure to a possible bullish movement. Of course, this is not working in all of them, but I can see an edge that I need to polish a little more before defining my final setup. (For this basic test I conducted, I placed stop losses below the throwback)
What if this keeps falling? Then you don't trade
What happens if you trade this and it's a stop loss? That's always a chance, to be precise, 50% of the time that happens to me, so make sure you control your risk (The general concept is 1% risk per setup) and only trade if your risk to reward ratio is equal to or higher than 1.8
Thanks for reading; I hope this was useful, and feel free to share your view and chart in the comments! Thanks.