$AAPL: all about them fibs, 'bout them fibs, no koolaid

Today's post will be rather short and sweet. I will be covering a very powerful indicator when it comes to charting and technical analysis: fibonacci retracements.

A lot of assumptions are made on the reader's part. Particularly that you know what fib retracements are and how to use them. If you're not familiar with this powerful trading tool, I suggest heading over to ClayTrader.com and signing up for his Robotic Trading course (no, I'm not being paid for this). The course will pay for itself quickly.

Anywho, today was a pretty solid day for the bears. Lately I've been preferring the side of the bear as swimming in this river has paid dividends that I never imagined making in the market. I thought this stuff was for geniuses. Turns out, anybody with proper education and discipline can make money in the market as a retail trader.

I didn't trade today, but I was very active in the Inner Circle chat and had some thoughts on what I would have traded if I had wanted to participate. The stock in question is the infamous $AAPL. So many people have mixed feelings about trading this beauty. I always feel optimistic. The chart is telling you a story, listen to it...

I'm going to jump right in the middle of the trading day... err... the "story"...

I drew in some of the areas that I would have made my entries and exits. I had all this stuff typed up beautifully on another computer, but then I shut it down without saving. Bummer. Oh well...

What can we tell from this story here? 

1. At least on the 1-min chart, we can see we're clearly in a downtrend. If this isn't obvious to you, more reason to purchase Clay's Robotic Trading course. Not trying to be rude, but it's not my job to teach you how to read a chart; only to provide my own personal analysis and show that reading charts really works in one's trading plan.
2. I drew a trend line around 8:30am MDT, connecting to highest highs (clear downtrend). 
3. There was a lot of bullish "false-hope" in this chart. At least in the short term. Everytime the bulls started picking up momentum, the bears stepped in to shut'em down. 
4. The stock finally broke the trend line around 11:50am MDT. 

My forecast at this point was clearly the stock would continue to fall the remainder of the day. It was a healthy downtrend on the 1-min timeframe and there wasn't significant volume from the bulls - even when it broke the trendline...

To my surprise, we got a bounce right off the trendline and the stock had a very solid bullish movement. This is the point at which I drew the fib retracement. I wanted to forecast what support/resistance levels we may see on the pullback from the big move. The following image is a zoomed in view of the bullish movement and the drawn in fib retracement. 

Can you see how the move started right off the bounce of the trendline? Isn't it amazing how helpful technical analysis can be? Anyway, getting off topic here... Based on previous history and overall trend in this chart, I expected a pullback to the 38.2% fib level, if not more. What transpired over the next couple hours was:

1. Stock pulled back like I expected, but all the way down to the 61.8% fib support level and bounced back up to it's previous high. 
2. The stock pulled back one more time to the 61.8% fib support and yet again bounced back to the top. 

From this point forward, the stock stopped trending and traded sideways in a channel between the high of the fib retracement and the 38.2% fib support. Crazy how that works huh? Near the end of the day, the stock actually broke out above the top fib retracement line and had yet another decent move to the upside. The confirmation in this bullish movement was volume and price action. Pay attention to the candles.

Do fibs really work? Was this just a coincidence? You be the judge of that. The next image I'm going to share with you is the same fib retracement lines across 4 timeframes... look at those support levels. Nothing was changed across these timeframes. I don't know about you, but I'm convinced ;]

That concludes today's ramblings. Hope you all had a green EOW. Have a great weekend and enjoy this nice weather we're finally having! 

- J.C. (The King) 

Power of charts - Learning from ClayTrader.com

Lessons in Support/Resistance, Patterns, Price Action and Patience...

Today was a solid day for me trading Options. It all started with a simple alert in Clay's InnerCircle chat room this morning...

Taking a look at the chart, we can indeed determine rather quickly that we are in solid downtrend on the 5-min timeframe. I was also late to read this chat post as the move had already happened, but now we see a Bull Pole forming in a downtrend...

After going through Clay's Robotic Trading course, I knew that the chances of this being a fakeout and breaking down with pressure from the bears was pretty high so I decided to keep an eye on it.

The stock had actually broken out shortly after getting eyes on it. However, I was still confident in my original assessment of what may possibly happen here. I drew up a support line with the thought process of "If this breaks down through this support, I will enter a long position with puts"...

Low and behold, we got confirmation on the break down of the support level and I made my entry. I rode this down for a solid profit on the day. My exit strategy was based purely on the price action/candle. As you can see, there was a pretty scary hammer candle before the big authoritative green candle(which was my confirmation to exit the trade).

As the day progressed, we started to notice another familiar pattern here - The Triple Bottom. From the definition, we can see the price of the stock breaking through the resistance and going much higher (bullish). Does this always happen? Certainly not, but these patterns/indicators are psychological and on a big boy stock like $GOOGL, there were plenty of eyes on this...

I watched closely as the stock bounced near perfectly off the support level. I made my entry shortly after and rode this back to the upside for even further profit. The bounce big authoritative candle was my confirmation that we would - at the very least - hit he resistance mark again. The rest is history... 

Just by following what the chart is telling me, I was able to make two really good trades today. Here's to hoping I can continue my awesome run and keep this going for years to come... Till next time, stay classy ;] 

- Jules Carter