{"id":20399,"date":"2022-12-05T07:30:10","date_gmt":"2022-12-05T12:30:10","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=20399"},"modified":"2022-12-05T07:30:10","modified_gmt":"2022-12-05T12:30:10","slug":"flashing-opportunity-in-this-beaten-down-sector","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/flashing-opportunity-in-this-beaten-down-sector\/","title":{"rendered":"Flashing Opportunity in This Beaten-Down Sector"},"content":{"rendered":"

Every trader should have a few go-to setups in their toolbox…<\/p>\n

The kind that when you spot it on a price chart, you know you’re likely to score.<\/p>\n

Because for technical analysts, good trading is all about pattern recognition.<\/p>\n

Of course, it’s also important for those patterns to have predictable outcomes.<\/p>\n

But remember this – nobody ever takes a trade expecting it to be a loser.<\/p>\n

Ultimately, trading is a game of probabilities. Even the best setups will fail occasionally.<\/p>\n

So, our goal is to stack the deck in our favor as much as possible.<\/p>\n

My Favorite Chart Setup<\/h2>\n

One of my go-to setups is a chart pattern called the head-and-shoulders.<\/p>\n

I like it because it’s easy to spot, and consistently allows me to spot the next change in momentum.<\/p>\n

It works in a variety of sectors, like in commodity markets<\/a>, currencies<\/a>, and now I’ve found one in biotech.<\/p>\n

So, today we’ll take a look at the iShares Biotechnology ETF (IBB)<\/strong>.<\/p>\n

IBB tracks the performance of the Nasdaq Biotechnology Index. It’s mostly made up of large-cap biotech companies like Amgen (AMGN), Gilead Sciences (GILD, and Regeneron Pharmaceuticals (REGN).<\/p>\n

Now, let’s look at the head-and-shoulders pattern on the IBB price chart below…<\/p>\n

\"Chart\"<\/div>\n

I’ve outlined three key characteristics of this pattern…<\/p>\n

    \n
  1. \n

    First, we have the left shoulder<\/strong>, which formed in March 2022 when IBB attempted to rally. This rally quickly stalled at around $135, leading to a sharp decline over the next several weeks.<\/p>\n<\/li>\n

  2. \n

    IBB finally found support around the $105 level in June, forming the head <\/strong>of the pattern. The market then rallied once more, eventually finding resistance back at $135.<\/p>\n<\/li>\n

  3. \n

    The ensuing decline found support around $113 in September, forming the right shoulder<\/strong>.<\/p>\n<\/li>\n<\/ol>\n\n\n\n
    \n

    Free Trading Resources<\/strong><\/p>\n

    Have you checked out Jeff’s free trading resources on his website? It contains a selection of special reports, training videos, and a full trading glossary to help kickstart your trading career \u2013 at zero cost to you. Just click here<\/a> to check it out.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

    Once the two shoulders and the head of the pattern are in place, it’s possible to draw the neckline<\/strong> (blue line). It’s a trendline that connects the left and right shoulders.<\/p>\n

    The head-and-shoulders pattern is complete once prices break beyond the neckline.<\/p>\n

    For IBB, prices broke through the neckline on November 30.<\/p>\n

    Now that the breakout is underway, I wouldn’t be surprised to see IBB return to its November 2021 peak of $164. That’s over a 20% move from the neckline of the pattern.<\/p>\n

    While my go-to head-and-shoulders pattern won’t always be on beaten-down sectors, they’re often the most lucrative.<\/p>\n

    And once the trend is in motion, I can comfortably place a trade in that direction.<\/p>\n

    In this case, biotech has taken a hard hit this year. So, the potential upside in IBB is quite exciting.<\/p>\n

    Traders should look to go long biotech in the short term.<\/p>\n

    Happy trading,<\/p>\n

    Imre Gams
    Analyst, Market Minute<\/em><\/p>\n

    <\/p>\n

    Reader Mailbag<\/strong><\/h2>\n

    What are some of your best go-to setups on a chart?<\/p>\n

    Let us know your thoughts – and any questions you have – at feedback@jeffclarktrader.com<\/a>.<\/p>\n

    <\/p>\n","protected":false},"excerpt":{"rendered":"

    Good trading is all about pattern recognition on the charts\u2026 <\/p>\n","protected":false},"author":49,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"ep_exclude_from_search":false,"service":"","footnotes":""},"categories":[1],"tags":[],"publication":[10],"person":[76],"newsletter-type":[],"ticker":[],"class_list":["post-20399","post","type-post","status-publish","format-standard","hentry","category-market-minute","publication-market-minute","person-imre-gams"],"acf":[],"_links":{"self":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/20399","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/users\/49"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=20399"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/20399\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=20399"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=20399"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=20399"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=20399"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=20399"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=20399"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=20399"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}