When Chop Happens and Top-Down Analysis

When Chop Happens

• Avoid consolidation areas; identify boundaries and stay away.

• When trading out of consolidation, the trade is done once empty space is filled.

Emotional Factors

• Greed can lead to trying to extend a trade beyond its logical conclusion.

Starbucks Example

• Trading out of consolidation through empty space.

• Once point A to point B is reached, the trade is complete.

General Strategy

• Avoid trades that haven't broken range or are not in empty space.

• Know when to exit trades and update watch lists.

• Example: Removed HIMSS and Tesla from watch list.

Tesla Example

• Counting candlesticks (8 days).

• Taking it off the watch list because the empty space was filled.

Trading in Uptrends

• Look to establish a floor after an upward move.

• Pull back to minor supports, bounce, build a box, and continue upward.

Trading in Downtrends

• Look for rejections after upward pops.

Importance of Knowing When to Trade

• Focus on areas with empty space after breaking consolidation.

Bounces off Structure

• Bouncing off structure after a fast fall can be a good sign, especially in an uptrend.

• Mark out floors and identify sideways movement after hitting the floor.

• Trade is done when moving sideways inside a weekly or 24-hour box after a quick move.

Uber Example

• Weak box characteristic: only one touch on each side (more like a range).

• Rushing down to the floor, curling back up.

• Opportunity for range if reclaiming a floor above and bouncing off structure below.

• Small pocket of empty space filled.

• Hitting the target, drawing back, and holding the floor before continuing up.

Disney Example

• Going sideways upon hitting structure.

• Gapping up well above the first floor.

• Filling the price up quickly.

UPS Example

• Target around 108.

• Trade from point A to point B.

• If in profit, everything else is free to measure above.

• If chopping in range, watch around July 1st.

• Vision board: If it pops after extended chop, it could hit the target after a third rejection.

• Target 108.35 depending on expiration.

• If able to grab or close on that floor, mark out levels on lower time frames.

• Correlate lower time frame levels (5 or 15 min charts).

• Acknowledge what's above to mark out where price needs to break.

• Mark out premarket high and low, look for retracement, and bounce.

• If it falls fast, expect a fast rip back up.

• Look for a bounce back up to reclaim the premarket floor.

• Use 50% mark if there's a premarket box or range.

• Use ORB (Opening Range Breakout) or premarket high for stop losses.

• Acknowledge next targets and let runners run.

Rolling Contracts

• Use generated capital to reinvest in longer expiration contracts.

• Sell current contracts and buy longer expiration ones.

• Acknowledge empty space and potential setup.

Nike Example

• Previous trade: coming out of consolidation to imbalance.

• Current setup: potentially good.

• Weekly and monthly charts show a lot of empty space.

• Possible short-term drop before pulling back up.

• Targets: 68.75 with runners to 71.87.

• Punch through box, resistance (one, two, three), and move up to 66.88 or 72.

• Get out of the trade if it opens above 68 and taps 71, especially with earnings approaching.

• Set alerts on places that matter, observe price, and be patient.

• Be patient looking for boxes.

Apple Example

• Targets up to 2.34.

• Downside limited to 1.85.

• Longer sideways movement tightens consolidation, loses option volume, and allows for scooping up at a deal.

• Looking for a punch back, move past 65, up to 68.60, and possibly runners to 71.87.

Rolling Contracts Details

• Rolls profit into the next trade, with options for contracts.

• Consider contract length relative to events (e.g., earnings).

• Hedges for 54.8 or 54.56 area.

• Chart earnings charts for the next 3-4 weeks to analyze setups and empty space.

Top-Down Analysis

• Start with a good setup (found on 24-hour chart Monday-Thursday, weekly on Friday).

• Use top-down analysis to reduce anxiety.

• Each time frame (monthly down) is more impactful.

• Monthly is important as it takes a month to settle price above a wall.

Nike Example (Top-Down Analysis)

Monthly

• Box to the left.

• Price moved down into but didn't close under the box.

• Overhead resistance at 66.35.

• Empty space.

• Floor where candles close at 74.50.

Weekly

• If candle breaks below the box, it invalidates the setup.

• Nike is in a weekly box.

• Empty space.

• Range below; bouncing off 59.41.

• Tight area of consolidation over the past 5-6 weeks.

• Targets: 68.60 and 69.40.

• Potential channel.

• Play from 60 to 69 with runners to 74.

24-Hour

• Two boxes above and below each other.

• Solid floor.

• Channel.

• Punch back setup.

• Resistance directly above, target above that by the first green candle at 71.87 (floor at 69.15).

• Area of consolidation.

• What’s above: 65 directly up, then targets at 69 and 71.80.

Four-Hour

• Decipher the potential.

• The setup looks good, need candle close outside or up against one side or the other.

• Marks out where potential lies, the need to identify how.

Two-Hour

• See a little bit more clarity.

• This was a box, and because that’s directly below me, I’m gonna chart it.

  • The first thing that you wicked off of was the first green candle to your left, which is how life works.

  • I can also see that the first thing that you wicked off of today is the first green candle wick bottom to your left, which is right here through that empty space.

Hourly

• Things are Changing.

  • Box 1.

  • Uh-oh. Box 2. Empty space.
    Perfect.

• Going in to earnings to find out which time frame is moving correctly.
  * The need to identify Sorry
  I need to go through what is underneath me as you're leaving the box.So for or or what needs to break.
  Cost basis is broken in Wednesday

• You would then need to know what has to be lost.

• The you aren’t losing any new pieces; use what is important

NEO Example

Weekly

• Floor is an imbalance or the 50% mark of a big green body.

Monthly

• Pushing off 3.93.

• Not much empty space above or below.

• Short-lived play.

24-Hour

• Box above, two gaps inside the box.

• Punch through would represent a break over 3.70.

• Channel down.

• One green candle splitting it in half, bouncing off.

• This isn’t anything showing high volume yet.

Trading computers

* The 24-hour chart can give clarity on what could potentially happen.
* The stock would need to get the needed volume due to how little the stock receives as of posting.

Four-Hour

• Floor has been reclaimed, the cost basis is still 3.45, 3.48 still could be a breaking point.

Summary of analysis

    The stock will also be at a play point to figure out what can be found.If the boxes will contain one another or follow from these patterns and move this way this is how you will find trading and to what’s above or underneath being what your floor is what your new target must attain.

How to manage your Trades.

-A big concern with all trades is not respecting my stop loss

• Can you accept to do your duties and not hang on and or to be competitive when the situation should be looked simply and be detached regardless.

• Try finding a problem and resolving

Establishing Stop Losses

• Using the lower time for framing what the trend is what can tell a direction if it may be going that trade or not

Buying into ETFS

* ETF has what each individual has.
* All contract with ETFS go at inflated states.
* It would take finding a small gap to close in 1 day to know the price with a target set.

Target Based Contracts:

Determine and anticipate the stock even on high trading months to find 220

Stock Analysis:

Finding something has empty space and that would cause my placement to expire for more chances to trade around time the high amount of the chart would be found near or far from the price and I will use that to place a volume to see if it will fill.