Self Directed Investor Inc
SDI: "Empowering investors with ideas and education"
Symbol Lookup »  
Topics:ChinaETFsEarningsEconomyEnergyForexGoldIncomeLessonsIdeasTrading

  • Other news: News from PR Newswire
| More

Tips for Trading Rising Range Patterns

Thu, Dec 20, 12:52 PM ET, by Corey Rosenbloom

The S&P 500 Index began trading in a Rising Range pattern as we turned the corner into December and so far has continued bouncing between the trendline boundaries of the pattern.

Let’s take a moment to learn a key trading lesson from recognizing and trading this popular price pattern – the tip is to drop to the intraday frame and look for confirming signals that align with the bigger picture trendlines.

Here’s the pure price pattern from late November to present:

The Rising Range pattern above may also be described as a “Rising Parallel Trendline Channel.”

The main idea is to identify an upper resistance line, a lower support trendline, and the “Midpoint” or middle line between the two parallel trendlines.

The Midpoint Line is the “Value” area which reflects the rising “value” (equilibrium) between buyers and sellers.

In hindsight, the pattern is crystal clear but the goal for successfully trading within these patterns involves early recognition and real-time monitoring.

That’s what I wanted to discuss in this post – a big tip for setting up successful, low-risk trades as long as price continues to trade within the pattern.

Trendline patterns like these need three and preferably four points (price highs and lows) from which you can draw parallel trendlines.

In this example, the four points developed into early December as highlighted.

From there, the parallel trendlines could be projected into the future (you may have to extend your chart area).

These extended trendlines serve both as targets (taking profits) and potential opportunities (to initiate new trades).

While it’s possible for short-term traders to use this simple pattern, the key to successful trading – with confidence – involves dropping to the lower timeframe to assess real-time conditions.

We’re looking for visual divergences that occur as price in real time interacts with the higher timeframe trendline.

Here’s what the real-time 5-min chart revealed during the last four “touches” or tests of these trendlines:

As December began, price was into an upper trendline and resistance area into the 1,420 level.

The 5-min intraday chart showed a visual negative divergence in Breadth as highlighted above – the November 29th peak in Breadth showed a reading of 1,717 while the index traded into 1,418; the December 1st Breadth peak (high of the day) was 1,117 (600 issues lower) as the SP500 made a new high above 1,422.

From there, price reversed toward the lower trendline and confluence support area of 1,400.

On December 5th, price did interact with the rising trendline and 1,400 area though Breadth was up almost 100 issues from the -890 reading from December 1st (when the index was trading at 1,409).

Those the early December intraday divergences and reversals were early in the broader Parallel Trendline Channel, the mid-December similar reversals had the benefit of being within clear and visual trendline boundaries:

On December 12th, price again interacted with the upper parallel trendline channel at 1,435 with a clear visual negative divergence in Breadth (1,452 on December 11th and 600 during the Fed-Day euphoria on December 12th).

Price subsequently traded toward the lower trendline boundary near 1,415 and reached this level on December 14th.

We see another clear visual positive divergence in Breadth relative to the December 13th lows (-1,570 with the SP500 at 1,418 versus -394 with the S&P 500 into 1,412).

From here, as seen in the 30-min chart above, price successfully rallied to the upper trendline above 1,445 and reversed again (with more divergences) from these levels.

The example here simply enhances the higher timeframe pattern by using lower timeframe Market Internals. The logic would be the same by showing divergences in momentum oscillators, NYSE TICK, or related indicators.

I hinted at it earlier when referencing the 1,400 support level, but it’s also helpful to view other levels of potential support and resistance when assessing the potential trading tactics at trendline boundaries (as I highlighted in the “SP500 EMA Support Check to Start the Week” post).

The main lesson is to incorporate lower frame charts (which reveal more information) when you’re assessing a higher timeframe pattern, especially a test of a key support or resistance level. This is the kind of logic we apply in the “game-planning” section of each night’s Idealized Trades daily reports for members.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey's new book The Complete Trading Course (Wiley Finance) is now available!

blog.afraidtotrade.com


SDI Glossary: "Channel" Definition
SDI Glossary: "price" Definition
SDI Glossary: "the Fed" Definition
SDI Glossary: "Finance" Definition
SDI Glossary: "NYSE" Definition
SDI Glossary: "Support" Definition
SDI Glossary: "TICK" Definition
SDI Glossary: "Trend" Definition
This Article's Word Cloud:   Breadth   Corey   December   From   Midpoint   Rising   Trendline   above   afraidtotrade   again   area   between   boundaries   chart   clear   divergence   divergences   early   four   from   higher   highlighted   into   intraday   level   levels   lower   parallel   pattern   potential   price   real   resistance   successfully   support   these   this   time   timeframe   trades   trading   trendline   trendlines   upper   visual   what   when   which   with   within

| More

"Filling Five Gaps in Your Trading" Webinar Recording
Fri, Jul 3, 2:11 PM ET, by Corey Rosenbloom

Are you not achieving the trading goals or financial goals you’re hoping to see with ...

Updating Sigma Band Volatility Chart of the SP500
Fri, Jul 3, 12:21 PM ET, by Corey Rosenbloom

As we cruise into the Fourth of July holiday weekend, let’s take a moment to ...

Pondering the Current Pivot Point in the SP500
Thu, Jul 2, 3:11 PM ET, by Corey Rosenbloom

On what level should we be focusing right now in the S&P 500? Let’s zoom-in ...

July 2 Midday Market Update and Stock Scan of the Day
Thu, Jul 2, 2:41 PM ET, by Corey Rosenbloom

Price traded in a similar pattern to what we saw yesterday, starting strong but weakening ...

First of July Market Update and Trending Stock Scan
Wed, Jul 1, 2:51 PM ET, by Corey Rosenbloom

And so begins Quarter 3 2015! The reversal continued yet price struggled mid-day in a ...

Four Stocks in the Dow Making Fresh 52 Week Lows
Wed, Jul 1, 12:11 PM ET, by Corey Rosenbloom

“What gets weak tends to get weaker; what gets strong tends to get stronger.” Which ...

Power Bounce Market Update and June 30 Stock Scan
Tue, Jun 30, 3:11 PM ET, by Corey Rosenbloom

What goes down must come up… right? After an initial bounce in the morning, price ...

Three Rocket Arc Patterns for Overseas ETFs EWG EWS and FXI
Tue, Jun 30, 11:21 AM ET, by Corey Rosenbloom

When doing ETF scans, I came across three “Rocket Arc” Patterns I wanted to share ...

Join Corey and Manesh Patel Tuesday June 30 for "Planning Trades for the Summer" Webinar
Tue, Jun 30, 9:51 AM ET, by Corey Rosenbloom

As we end the second quarter 2015 (can you believe it?), what opportunities are setting ...

Today's 34% VIX Spike and What to Expect Going Forward
Mon, Jun 29, 9:41 PM ET, by Bill Luby

One of the top posts of 2013 was All-Time VIX Spike #11 (and a treasure ...

Longest SPX Peak to Trough Pullback Since 2012
Mon, Jun 29, 8:11 PM ET, by Bill Luby

I have been quiet in this space as of late, but there is nothing like ...

June 29 Greece Market Update and Falling Stock Scan
Mon, Jun 29, 2:31 PM ET, by Corey Rosenbloom

Markets got a rough start to the week with a gap-down and trend day lower ...

Quick Quad-Market Reaction Grid to Start the Week
Mon, Jun 29, 11:31 AM ET, by Corey Rosenbloom

With bearish news about Greece hitting the markets this weekend, money flow quickly shifted in ...

SP500 Continues to Respect the Rangeā€¦ For Now
Mon, Jun 29, 10:41 AM ET, by Corey Rosenbloom

With fears increasing that “all may not go well” with Greece over the weekend, markets ...

June 26 Repeat Day Market Update and Stock Scan
Fri, Jun 26, 1:41 PM ET, by Corey Rosenbloom

So far, price is repeating a pattern that we saw yesterday. Both sessions saw rallies ...

June 25 Range Breakout Market Update and Stock Scan
Thu, Jun 25, 2:31 PM ET, by Corey Rosenbloom

After yesterday’s Trend Day Down, price stabilized at support into a morning Range Day. However, ...

Big Picture Planning the Key Support Shelf and Range in Gold
Thu, Jun 25, 2:11 PM ET, by Corey Rosenbloom

On the short-term frame, Gold trades within a well-defined rectangle trading range. Traders can continue ...

June 24 Trend Day Stock Scan and Market Check
Wed, Jun 24, 4:11 PM ET, by Corey Rosenbloom

Logic suggested a downward swing away from resistance today and that’s precisely what we saw. ...

Color Structure and Trend Charts of US Stock Market June 23
Tue, Jun 23, 3:51 PM ET, by Corey Rosenbloom

Let’s take a moment to update our “Color Structure and Price Trend” charts of our ...

3 Top Stocks Currently in Rising Wedge Patterns
Tue, Jun 23, 10:51 AM ET, by Corey Rosenbloom

Which three “Top Stocks” in the S&P 500 with Rising Wedge price patterns are we ...

Scanning the Four Dow Jones Stocks at New 52 Week Highs
Mon, Jun 22, 4:11 PM ET, by Corey Rosenbloom

On Friday and today’s bullish session, four stocks in the Dow Jones Industrial Index of ...

June 22 Big Greek Rally Update and Stock Scan
Mon, Jun 22, 2:11 PM ET, by Corey Rosenbloom

Greece is saved! For the one hundredth time. And stocks boosted higher off the open ...

June 19 Retracement Market Update and Big Trending Stock Scan
Fri, Jun 19, 3:11 PM ET, by Corey Rosenbloom

After two solid up-sessions, price pulled back in a retracement from resistance today. What’s going ...

Up Again We Go Post-Fed Market Update and Stock Scan June 18
Thu, Jun 18, 3:11 PM ET, by Corey Rosenbloom

Post-Fed Day! Buyers were happy with the Federal Reserve’s statement and thus boosted the market ...

Harley Davidson HOG Builds Power Rally off Support
Thu, Jun 18, 1:21 PM ET, by Corey Rosenbloom

We’re seeing a number of stocks build similar patterns but I wanted to highlight Harley ...

Chart Art Parabolic Bullish Arc in DSKX
Thu, Jun 18, 12:51 PM ET, by Corey Rosenbloom

You certainly don’t see patterns like this every day! Lesser-known stock DS Health Care (DSKX) ...

MultiMarket Big Reaction to Fed Announcement
Thu, Jun 18, 12:11 PM ET, by Corey Rosenbloom

Yesterday’s Fed Announcement that interest rates will likely remain unchanged through most – if not ...

Trip Advisor TRIP Takes a Big Journey Higher off Support
Wed, Jun 17, 3:21 PM ET, by Corey Rosenbloom

One of the strongest stocks today is TripAdvisor (TRIP) which launched powerfully up from a ...

June 17 Fed Day Market Update and Stock Scan
Wed, Jun 17, 2:51 PM ET, by Corey Rosenbloom

Fed Day! Today we’re trading in a news-driven volatile environment as the Fed releases its ...

Quick Breakout Level Planning on Dow SP500 and NAS ahead of the Fed
Wed, Jun 17, 11:31 AM ET, by Corey Rosenbloom

The Federal Reserve announcement and press conference today could be a catalyst for a breakout ...

Tonight! Small-Lot Options Growth Strategies Webinar 8pm EST
Tue, Jun 16, 3:41 PM ET, by Corey Rosenbloom

If you’re new to options trading or just want a refresher class on how to ...

June 16 Bullish Dominance Market Update and Stock Scan
Tue, Jun 16, 2:51 PM ET, by Corey Rosenbloom

Buyers win again! That’s the case almost every day now so perhaps this shouldn’t be ...

How the Weekly SP500 Chart Helps Our Game Planning
Tue, Jun 16, 10:41 AM ET, by Corey Rosenbloom

The S&P 500 and Dow Jones face a critical “support test” level, and our trades ...

Buyers Defending Key 2,070 and 17,700 Index Levels
Mon, Jun 15, 11:51 AM ET, by Corey Rosenbloom

For the third time recently, buyers rushed in to defend and bounce the market up ...

Trading Apple AAPL at Key Pivot Level
Fri, Jun 12, 3:21 PM ET, by Corey Rosenbloom

Apple (AAPL) shares face a key support pivot level from which we can plan our ...

June 12 Sell Swing Market Update and Stock Scan
Fri, Jun 12, 3:11 PM ET, by Corey Rosenbloom

Divergences yesterday gave way to a short-term reversal and sell-swing breakdown today. What levels are ...

More Divergences and a Price Planning Grid for SP500
Fri, Jun 12, 1:21 PM ET, by Corey Rosenbloom

Intraday divergences have been very helpful lately for calling intraday reversals in the stock market. ...

What's Behind the Big Trade?
Thu, Jun 11, 4:11 PM ET, by Corey Rosenbloom

Last year, John Carter made over one million dollars trading Tesla (TSLA) in a single ...

June 11 Consolidation Market Update and Big Stock Scan
Thu, Jun 11, 2:11 PM ET, by Corey Rosenbloom

Yesterday’s session was a huge – expected – bullish surge (reversal) off support. Today’s session ...

Trading the Expected Bounce Rally Off Support
Wed, Jun 10, 11:31 AM ET, by Corey Rosenbloom

It’s neat – and efficient – when the market does exactly what it should do! ...

Lululemon LULU Stretches to Breakout with Trade Targets
Tue, Jun 9, 1:11 PM ET, by Corey Rosenbloom

Yoga active wear company Lululemon (LULU) reported better than expected quarterly revenue this morning, and ...

Descent Continues for Airline Stocks LUV UAL DAL
Tue, Jun 9, 11:11 AM ET, by Corey Rosenbloom

After reaching cruising altitude, airline stocks have begun their descent to lower levels. Let’s update ...

June 8 Dow Jones Strong and Weak Daily Scan
Mon, Jun 8, 6:31 PM ET, by Corey Rosenbloom

At the end of the day, it’s helpful to look back on the strongest and ...

Tesla TSLA Revs Up with a Breakout - Level Planning
Mon, Jun 8, 3:51 PM ET, by Corey Rosenbloom

Tesla (TSLA) stock broke key resistance today, surging into open air for a possible breakout ...

Sell Swing Market Update and Big Stock Scan June 8
Mon, Jun 8, 3:11 PM ET, by Corey Rosenbloom

The sell-swing continued this morning although mid-day we’re seeing a possible big bullish reversal. Is ...

The Current Battle to Hold a Key SP500 Trendline
Mon, Jun 8, 1:11 PM ET, by Corey Rosenbloom

We’re back to the infamous “Will it or Won’t It” break or hold a key ...

June 5 Stable Market Update and Trending Stock Scan
Fri, Jun 5, 2:21 PM ET, by Corey Rosenbloom

After yesterday’s strong sell session, price stabilized and traded in a range today. Is a ...

More Big Movement in the Multi-Market Money Flow Grid Today
Fri, Jun 5, 1:21 PM ET, by Corey Rosenbloom

Yesterday we saw big price movement in our Multi-Market Grid and today we’re seeing additional ...

June 4 Breakdown Market Update and Big Stock Scan
Thu, Jun 4, 2:41 PM ET, by Corey Rosenbloom

The range broke and price collapsed toward – then under – the 2,100 target! Which ...

Quick Charting MultiMarket Money Flow June 4
Thu, Jun 4, 12:31 PM ET, by Corey Rosenbloom

Today we’re seeing volatility spike in all markets with a “Risk-Off” perspective sweeping the scene. ...

  More articles:  1 2 3 4 5 6 7 next »

ABOUT US »   ADVERTISE »   CONTACT US »   TERMS OF USE & PRIVACY POLICY »

Tips for Trading Rising Range Patterns | Self Directed Investor | Copyright © 2008 - 2015, All Rights Reserved

Any ideas and opinions presented in Self Directed Investor content are for informational and educational purposes only, and do not reflect the opinions of BNK Invest, Inc. or any of its affiliates, subsidiaries or partners. In no way should any content contained herein be interpreted to represent trading or investment advice. None of the information contained herein constitutes a recommendation that any particular security, portfolio, transaction, or investment strategy is suitable for any specific person. All site visitors agree that under no circumstances will BNK Invest, Inc,. its subsidiaries, partners, officers, employees, affiliates, or agents be held liable for any loss or damage caused by your reliance on information obtained. Read Full Disclaimer.

SDI is associated with: ValueForum.com -- a subscription-based online social networking forum of serious individual investors. | MarketNewsVideo.com -- videos appearing on SDI are produced by Market News Video. | TickerTech.com -- stock quote content appearing on SDI is at least 20 minutes delayed and is powered by Ticker Technologies. | GoldStockStrategist.com -- Edited by Scott V. Nystrom, PhD, Gold Stock Strategist provides analysis on gold mining companies.