{"id":21505,"date":"2024-01-15T07:30:31","date_gmt":"2024-01-15T12:30:31","guid":{"rendered":"https:\/\/www.jeffclarktrader.com\/?p=21505"},"modified":"2024-01-15T07:30:31","modified_gmt":"2024-01-15T12:30:31","slug":"if-you-can-read-this-you-can-make-money","status":"publish","type":"post","link":"https:\/\/jeffclarktrader.com\/market-minute\/if-you-can-read-this-you-can-make-money\/","title":{"rendered":"If You Can Read This, You Can Make Money"},"content":{"rendered":"

I’ve got something special planned for today’s edition of Market Minute..<\/em>.<\/p>\n

Last Monday,<\/a> I started a mini-series focused on the ins and outs of technical analysis.<\/p>\n

And today, we’re going in deeper…<\/p>\n

We’re going to break down the SPDR homebuilders ETF (XHB). I put XHB on your radar back on December 6<\/a>. At the time, the ETF was tracing out one of my favorite chart patterns – the cup and handle.<\/p>\n

And if you traded this pattern the way I suggested, you would have had the chance to put away a tidy profit…<\/p>\n

So Simple My Seven-Year-Old Niece Can Do it<\/h2>\n

As I wrote last week, there are many different ways to approach technical analysis. My approach is to look for two simple things:<\/p>\n

    \n
  1. \n

    Market structure<\/p>\n<\/li>\n

  2. \n

    Chart patterns<\/p>\n<\/li>\n<\/ol>\n

    Market structure just means identifying the larger trend. A market is either trending higher, lower, or going sideways.<\/p>\n

    Trend identification is usually simple. In fact, one of my favorite games to play with my younger nieces and nephews is to show them a price chart. I’ll then ask them if they think the chart is going up, down, or sideways.<\/p>\n

    They’ve never been wrong. Not even once.<\/p>\n

    Traders love to overcomplicate simple problems. Don’t make it a habit to overcomplicate market structure analysis. If a seven-year-old can do it, you definitely can.<\/p>\n

    An Art and a Science <\/h2>\n

    Chart patterns is where things get a lot more fun and interesting. Chart patterns are much more subjective and open to interpretation. Remember, technical analysis is both an artform and a science.<\/p>\n

    This is especially true when it comes to chart patterns.<\/p>\n

    The good news is that we simplify things here, too. All we have to do is divide all chart patterns into two categories – reversals and continuations.<\/p>\n

    A reversal pattern signals a trend is ending. For example, if a stock is in an uptrend and we spot a reversal pattern, it’s a sign that we’re going to get a sustained period of selling.<\/p>\n

    Continuation patterns are a temporary interruption of the current trend. Once the continuation pattern completes, the previous trend will resume.<\/p>\n

    Let’s now examine XHB’s price chart from a market structure perspective. The chart below plots XHB’s price action since its significant low in March 2009.<\/p>\n

    Pay attention to how the swing points – both the swing lows and swing highs – march steadily upwards.<\/p>\n

    This is a crystal clear sign the market is in a long-term uptrend.<\/p>\n

    In fact, you can’t have any kind of directional trend without swing points moving in concert either higher or lower.<\/p>\n

    <\/p>\n

    \"Image\"<\/p>\n

    Since we can establish that XHB is in an uptrend, this means we want to look for trend continuation patterns as a reason to buy the stock.<\/p>\n

    That’s where the cup and handle pattern mentioned near the beginning of the essay comes in. The cup and handle is a classic continuation pattern.<\/p>\n

    Check out the pattern below:<\/p>\n

    <\/p>\n

    \"Image\"<\/p>\n

    The trigger to trading the pattern is usually to wait for prices to break past the neckline. In the case of XHB, the breakout occurred on December 1.<\/p>\n

    You can see how powerful these continuation patterns are. Since breaking out, XHB rallied 14% in under a month. And in doing so, XHB also created a brand new swing high.<\/p>\n

    <\/p>\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<\/p><\/div>\n<\/div>\n

    <\/p>\n

    We’re already seeing a little pullback underway. This means we should be on the lookout for another trend continuation pattern to take shape.<\/p>\n

    Trend continuation patterns directly translate into money-making opportunities.<\/p>\n

    Technical analysis can be very simple… and extremely powerful if you know what you’re doing. If XHB’s pullback turns into a great trend continuation pattern, we’ll have another update to this series.<\/p>\n

    Happy trading,<\/p>\n

    \"Signature\"<\/p>\n

    Imre Gams<\/p>\n

    P.S<\/strong>. Did you find this case study helpful, and would you like to see more? Please let me know at feedback@jeffclarktrader.com.<\/p>\n","protected":false},"excerpt":{"rendered":"

    I\u2019ve got something special planned for today.<\/p>\n","protected":false},"author":55,"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-21505","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\/21505","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\/55"}],"replies":[{"embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/comments?post=21505"}],"version-history":[{"count":0,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/posts\/21505\/revisions"}],"wp:attachment":[{"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/media?parent=21505"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/categories?post=21505"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/tags?post=21505"},{"taxonomy":"publication","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/publication?post=21505"},{"taxonomy":"person","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/person?post=21505"},{"taxonomy":"newsletter-type","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/newsletter-type?post=21505"},{"taxonomy":"ticker","embeddable":true,"href":"https:\/\/jeffclarktrader.com\/market-minute\/wp-json\/wp\/v2\/ticker?post=21505"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}