Chart of the day! - 9 December 2022

CHART OF THE DAY

In this series I will share my personal favorite breakout chart. The one which fits my setup the most & I like.

A little disclaimer in the start - Just because I like anything doesn't mean you should go & buy it. I might be completely wrong in this. My intention here is just to let you know my personal high conviction pic. I'm a human & I also make mistakes. Always follow risk management & please consult your financial advisor before arriving at any decision. All this is for educational purposes only & my goal is to make you an independent trader. So, if you're buying or selling anything just because I'm posting about it, you are completely defying my intention of creating all this. So please refrain from doing the same. Thank you!

So, here is today's CHART OF THE DAY :-

Chart of the day

But.... where is the name?

Well, If you just want to know the Chart, scroll to the bottom, for explanation read below!

What's bullish in this chart?
Good question. Lets first observe the chart and decode what's happening inside. So, this a classic symmetrical triangle pattern. A pattern in which buyers and sellers enter into the war of dominance, where both buyers and sellers are aggressive and whichever side wins, rockets are fired.
Take this chart only for example, buyers buy taking the price up, then it rejects making a top and sellers sell it. Then, before it reaches the previous bottom, buyers show aggressive but the sellers too are playing along! They show aggression as well selling before the top!
This back and forth has happened 3-4 times now making the range is really really narrow. When you connect those tops & bottoms, voila! you got a beautiful looking triangle which is about to break & probably explode giving you a great trading & hence money making opportunity.
Now, second thing. Have a look at those volumes. During that back and forth which was happening between buyers & sellers, observe how volumes behaved. Are you able to see any pattern and decode something? Try yourself.
Yes, you spotted correctly, while the stock was going up it was moving with great volumes (those big green buildings below) & when it was going down, the volumes weren't that impressive.
This is a bullish signal cause it shows the sellers are kind of weak. But, remember, this does not confirm a breakout. This is not a sole reason to take a trade. This can just used just as a +1 conviction.
And now, we, the audience, plays a waiting game. We wait for a winner to be announced so that we can join his party and hopefully make some good amount of money as well!!
BUT WHY WAIT, WHY CAN'T WE BUY NOW?
Well, nothing's stopping you if you're a trader with high risk profile. I personally, don't like to enter symmetrical triangles before breakout because the odds current of a breakout or a breakdown are plain 50-50.
Of course we can use analysis like candlestick patterns or volumes or RSI or anything else you want to but ask yourself, are they that reliable? The decision of the market is supreme than any other indicator, after all.
So, instead of playing with fire, why not show some patience & enter only when a certain confirmation level has been breached. What if the sellers just take a small step backwards to excite buyers & then bounce back with a really huge force winning the battle?
Yes, I understand entering late might eat some of our profits, but think of it like an insurance. It increases your accuracy by a huge margin.
One thing to remember, its a buy before breakout setup, don't buy it blindly.THIS IS NOT A BUY/SELL RECOMMENDATION (PLEASE READ THE DISCLAIMER AT THE TOP AGAIN).

So, These are the reasons why I am bullish on this particular chart. Do you have any other input? Fell free to share with us in the comments below!

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