Factor Update, May 14, 2017
This content is for members only
Cup and Handle – Guest Post
Factor Trading is honored to be joining forces with my friend Aksel Kibar and his firm TechCharts to provide comprehensive coverage of global forex, futures and equity markets from the perspective of classical charting principles.
TechCharts will begin as a subscription-based service on May 22 — with a pricing discount for Premium Members of the Factor Service.
Our mutual mission is to alert members of the Factor Service and TechCharts to markets exhibiting those classical chart patterns with highest level of reliability.
In the weeks ahead Aksel will post material on the Factor web site so that you can sample the wonderful work he does.
Please see the recording of the video between Aksel and myself discussing this new association. Link Here
Peter Brandt
Cup and Handle
by Aksel Kibar
The Cup with Handle is a bullish continuation chart pattern that marks a consolidation period followed by a breakout. It was developed by William O’Neil and introduced in his 1988 book, How to Make Money in Stocks. Cup with handle is a chart pattern that has a well-defined horizontal boundary. Breakouts from chart patterns with horizontal boundary are usually strong and reliable. As its name implies, there are two parts to the pattern: the cup and the handle. The cup forms after an advance and looks like a bowl or rounding bottom. As the cup is completed, a trading range develops on the right hand side and the handle is formed. A subsequent breakout from the handle’s trading range signals a continuation of the prior advance. Breakouts that complete a lengthy bullish continuation chart pattern and also record new all-time highs offer great long-term opportunity.
TAG IMMOBILIEN AG (TEGG.DE)
A 2 year-long cup with handle chart pattern formed on TAG IMMOBILIEN, a financial company listed in Germany on XETRA exchange. TAG Immobilien AG is a Germany-based real estate company that focuses on the acquisition, development and management of residential real estate. The geographical focus is on northern and eastern Germany, such as the metropolitan areas of Hamburg and Berlin, as well as on the Salzgitter and Thuringia/Saxony regions and North Rhine-Westphalia.
The stock not only formed a 2 year-long cup with handle chart pattern but also another shorter duration cup with handle chart pattern that is possibly acting as a launching pattern. For more information on launching patterns you can check out last week’s guest post here. (Launching Patterns – Guest Post May 2, 2017). When two chart patterns implying the same technical outlook overlap, the breakout is usually more significant. In this case the 8 month-long cup with handle and the 2 year-long cup with handle continuation chart pattern both suggests higher levels in the coming weeks/months. The daily close above 13.50 levels confirmed the breakout from the bullish continuation chart patterns. The breakout was featured in the Global Equity Markets – May 6, 2017 report. There are two possible chart pattern price targets. One calculated from the 8 month-long cup with handle and the other from the 2 year-long bullish continuation cup with handle. Charts below show both possibilities and how these two chart patterns are labelled. Initially TAG IMMOBILIEN can target 15 levels and possibly continue towards the larger scale chart pattern price target at 16.6 levels.
A similar chart pattern developed on CINEWORLD GROUP in the beginning of the year. The breakout and the follow through is a perfect example for cup with handle chart pattern.
CINEWORLD GROUP (CINE.L)
CINEWORLD GROUP is a consumer cyclical company listed on the London Stock Exchange. Price chart completed a 16 month-long cup with handle chart pattern and broke out to all-time high levels. The stock was covered in the Global Equity Markets – January 21, 2017 report under the watchlist. The breakout took place in the following weeks with a strong weekly price action and it was alerted and featured on the Global Equity Markets – February 4, 2017 report. Since then, CINEWORLD GROUP has been in a steady uptrend. With this week’s strong price action CINEWORLD GROUP reached its chart pattern price target at 720 levels.
To learn more about Cup with handle chart patterns you can watch this video.
VIDEO :CUP & HANDLE – FRONTIER SERVICES
Please visit my website at >>> https://blog.techcharts.net where you can sign up for free and receive my weekly Global Equities Market Report.
Regards,
Aksel Kibar
Member only Q&A with Peter – Thursday, May 11th at 11am Mountain
This content is for members only
Factor Update, May 7, 2017
This content is for members only
Alert on US Dollar, May 3, 2017
This content is for members only
Launching Patterns – Guest Post
Factor Trading is honored to be joining forces with my friend Aksel Kibar and his firm TechCharts to provide comprehensive coverage of global forex, futures and equity markets from the perspective of classical charting principles.
TechCharts will begin as a subscription-based service on May 22 — with a pricing discount for Premium Members of the Factor Service.
Our mutual mission is to alert members of the Factor Service and TechCharts to markets exhibiting those classical chart patterns with highest level of reliability.
In the weeks ahead Aksel will post material on the Factor web site so that you can sample the wonderful work he does.
Please see the recording of the video between Aksel and myself discussing this new association. Link Here
Peter Brandt
Launching Patterns
by Aksel Kibar
Chart patterns form over varying duration. On a weekly scale chart, a 3 month-long consolidation pattern can exist within say a year-long chart pattern. These shorter and longer duration chart patterns can have the same boundary lines and a breakout from the short-term chart pattern can also complete the long-term chart pattern.
In such cases the short-term chart pattern is called a launching pattern. Identifying a launching pattern can be important. Breakout from such consolidation periods will not only trigger a chart pattern breakout signal in the short/medium-term but also result in a long-term shift in the direction of the trend.
The weekly price chart of RYANAIR HLDG formed a 15 month-long cup & handle continuation chart pattern. The handle part of the bullish continuation chart pattern formed a separate 4 month-long rectangle consolidation. The rectangle continuation acted as a launching pattern for the larger scale chart development. Breakout from the 4 month-long sideways consolidation not only completed the rectangle but also breached the boundary of the 15 month-long cup & handle chart pattern pushing the stock to all-time high levels.
RYANAIR HOLDINGS PLC (RYA.L)
A similar chart setup developed in late 2016 on a Swedish Technology company FORMPIPE. A well-defined 16 month-long ascending triangle completed as a launching pattern from a multi-year symmetrical triangle. This was a massive long-term opportunity. Breakout cleared strong technical resistance between 9.75 and 10 levels. Tech Carts Global Equity Markets report highlighted the significant chart development in its January 21, 2017 report. Several updates on twitter showed the breakout and the trend that developed following the strong breakout.
FORMPIPE (FPIP.ST)
See this Educational Video I put together discussing rectangle patterns in classical charting and more relevant to this post, how they can act as a launching pattern.
Please visit my website at >>> https://blog.techcharts.net where you can sign up for free and receive my weekly Global Equities Market Report.
Regards,
Aksel Kibar
Taking Profit – A Trader’s Challenge
Taking Profit
The following is a discussion on Taking Profit from our member Q&A feature at Factor Trading.
Question:
Your reports on markets and discussions surrounding the more thorny issues of portfolio/trade management and emotions are without parallel. I am writing you in hopes of some advice. I am having problems with my trading in the sense that I often take my profits on a trade before it reaches my target, sometimes well before the target is reached. In other words, I am not being disciplined enough with trades that are going in my favor. Is there anything you can suggest (a book, a trade process, etc.) which can help me improve and work on my trade discipline? Thanks very much.
–Factor member, London
Response:
You describe a challenge that faces all discretionary position traders at some point in their careers. The temptation to take profits in a trade are overwhelming, especially during difficult trading periods and drawdowns. After watching the initial early profits on a few trades turn into losses creates a great emotional urge to grab a quick profit the next time one becomes available.
Ultimately this is a challenge every trader must work out for him or herself. There is no easy answer — what you describe is basically an inner battle that must take place with each trader. I engaged this inner demon early in my trading career — and I must admit that the “take profits before they disappear” inner voice makes itself heard even today. The upstream swim against human nature never ends — although it does get easier. Base emotions are never really defeated for a discretionary trader — the best we can do is to manage counter- productive urges.
I must start off by emphasizing that being a “target trader” is not for everyone. I know very successful traders who seek a three or four-day price surge (or break) and then step aside and look for other similar opportunities. I also know successful traders who would not think about “target trading” — they want to ride out a trend for as long as it continues (using various trend-following techniques).
If it is your strong desire is to be a “target” trader, let me suggest simple moving averages may be a way to get there — but you must look at this challenge as a marathon (requiring several years of development) and not a quick-fix.
If your account allows for a multiple-contract position futures, you might allocate at least one contract initially to a simple moving average system of your design. Perhaps you stay with the position as long as the 8-day or 14-day or 21-day or whatever moving average confirms the trend — of course then taking profits at the target if that is your goal. It is quite easy to split an equity or spot forex position into tiers for the purpose of delegating a partial position to a trend following model.
Hope this helps.
plb
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Peter Brandt is a 40+ year veteran of trading. Through his Factor Service, members receive:
Trading Commodity Futures with Classical Chart Patterns: A free PDF copy of Peter’s classic out-of-print bookWeekend Update: 10-16 pages full of in-depth chart analysis and charting commentaryAlerts: Detailed information on specific charts as unique opportunities present themselvesMarket Commentaries: Communications on specific topics regarding market speculation and trading distributed periodicallyWebinars: Monthly member-only webinars where Peter speaks about current conditions and fields member questionsKnowledge Center: Fast and easy access to current and archived content from Peter’s extensive library of contentAutomatic notifications: Email and social media notifications are sent out when new content is published.
View your Factor Member options here. You could consider your membership in the Factor Service as just one more trade. If the Factor Service is not of value to you, well, it is just one more trade that did not work. Through the Factor Service I endeavor to alert novice and aspiring traders to the many pitfalls you will face – and to offer advice on overcoming those pitfalls. My goal is to shoot straight on what trading is all about. For more information watch my 30 minute webinar where we cover the Factor service in depth.
I hope you will consider joining the Factor community.
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