Planning Stock Trades:

Entry and Exit

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TECHNICAL ANALYSIS
Tools of Trading

• Goal: Identify special cause as quickly as possible, not

predict the future
• Match the tool to the market
• Keep it simple but robust
• No two markets are ever the same; hone your judgment
• Like fertilizer, more is not always better
SUPPORT AND RESISTANCE
Support and Resistance Defined

• SUPPORT is a price level where buying

becomes stronger than selling and prices rise

• RESISTANCE is a price level where selling

becomes stronger than buying and prices fall
TRADE CONDITION 1
Gap Fill

Gap defined

Gap Gap fill and reversal

TRADE CONDITION 1
Gap Fill

Gap fill and reversal

• Look for reversal candles at fill

Gap
point

• Watch for volume confirmation

• Protect above fill point

• First target is the gap starting point

TRADE CONDITION 2
Channel Breakout

Channel

Breakout: any significant

move outside an
established trading range
TRADE CONDITION 2
Channel Breakout

Breakout

• Closing price outside the channel

• Watch for volume confirmation

• Protect above channel support or below

channel resistance

• First target is the channel width from

breakout point (measured move)

• Use stop orders to protect entry price

TRADE CONDITION 3
Role Reversal
TRADE CONDITION 3
Role Reversal

Role Reversal

• Wait for the price pivot

• Look for trend reversal candles

• Protect below role reversal support

• First target is the previous high

• Be prepared for multiple entries if price

starts channeling
TRADE CONDITION 4
Retracement lines for support and resistance

• Retracement lines from highs / lows

• Applied to multiple time frames

• Based on the Fibonacci sequence: 1, 2, 3, 5, 8, 13, 21…

• Retracements based on the Golden Ratio:

.618, (1 - .618) = .382
TRADE CONDITION 4
Retracement lines for support and resistance

Retracement

• The key is choosing the correct high and

low

• Tighten stops at each retracement price

• May trade breakout or reversal

• Watch for new high/low legs

• May be used for daily, weekly, monthly –

weaker when used intraday
TRADE CONDITION 5
Trend reversal candles

3. Shooting Star
2. Resistance

4. Confirmation
1. Uptrend
TRADE CONDITION 5
Trend reversal candles

Trend reversal candle

• Make sure it meets ALL requirements

• Wait for confirmation if required

• Protect above resistance

• Target is identified support or measured move

• Choose a few key candle patterns to start with

Planning Stock Trades:
Entry and Exit