Use Two Time Periods to Increase Your Win Odds – Getting Started from a Strategic Perspective | chart of art

Chartists looking to increase their odds should consider two time periods for their analysis. Long time frames set the strategic tone, while shorter time frames define trading tactics. Strategically, I’m interested in stocks with a long-term upward trend. Tactically, we are looking for a bullish continuation pattern to trade after a correction. Let’s look at an example using Northorp Grumman (NOC).

The chart below shows weekly candlesticks leading into summer 2021. NOC rose from 350 to 550 (+60%), hitting a new high in October 2022. The stock then fell sharply in early 2023 and continued to decline until October 2023. Overall, the decline has retraced about 61.8% of its previous gains, forming a sort of triangle shape. Also note that NOC is back to its previous breakout area. Retracement zones and broken resistance have created support reversal zones (red-green lines). NOC saw a large spike in October (green arrow), a move that reversed a long-term downward trend.

The bottom window shows the percentage difference between the closing price and the 40-week SMA. The horizontal lines are at +5% and -5% to filter the signal. A move above +5% indicates an upward trend and will remain so until a move below -5%. Notice how the indicator fell below -5% in early 2023 and then remained bearish until it surged above +5% in October 2023 (gray arrow). This indicator also indicates strength over the long term. This indicator is part of the TIP Indicator Edge plugin for StockCharts ACP.

When the long-term trend is rising and the weekly chart is broken, you can look at the daily chart for tactical decisions. This section continues for TrendInvestorPro members. TrendInvestorPro’s Chart Trader product provides extensive market analysis and carefully curated trade setups for stocks and ETFs. We focus on bullish continuation patterns like the one above. Reports are released every Tuesday and Thursday before the market opens, and each report includes a video. Click here for more information.

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