How to Trade a Double Top and Double Bottom Correctly — Transcript

Full transcript

1. 0:00So if you've been day trading for any amount of time, you've
2. 0:03definitely heard the phrase double bottom and double top.
3. 0:06When there is an area of support and the price has bounced off of it,
4. 0:11it tends to come down and test it again and bounce off of it.
5. 0:15Same with the level of resistance the price will touch it and then
6. 0:18come back up to retest it.
7. 0:20The issue with double tops and double bottoms is you don't know if
8. 0:24it's going to be a triple top or not show in this video, I'm going to
9. 0:27show you exactly how to trade a double top and know that it is
10. 0:32actually going to reject off of that second retest.
11. 0:37Welcome back to the channel, everybody.
12. 0:40My name is already and this is the moving averages, shall we discuss
13. 0:43everything day trading to keep you profitable on a consistent basis.
14. 0:47This strategy is ridiculously simple so it does not require an 18
15. 0:51minute video.
16. 0:52So this is going to be explained to you in the next 5 minutes.
17. 0:55I've got two coffees cuz I've had 3 hours of sleep.
18. 0:58So let's get into the charts.
19. 1:00All right, we are looking at us-30 on a 15-minute time frame.
20. 1:05You do not want to do this on a lower time frame like the one minute
21. 1:09or the 5 minute because you want to look at key levels of support and
22. 1:13resistance and on those lower time frames, those are not he levels of
23. 1:18support and resistance.
24. 1:19They are kind of just he's really weak levels, the higher the time
25. 1:23frame, the more significant the level.
26. 1:25So when looking at support and resistance levels, basically, you're
27. 1:29just drawing a horizontal line across multiple intersecting points.
28. 1:33You're only taking into account, the big rejection
29. 1:37Areas where the price saw a lot of resistance or a lot of support and
30. 1:41bounce off of that.
31. 1:42And it's that simple looking back here from today back to April 16th
32. 1:47on us-30, I've got three lines and that's it.
33. 1:50Now what you're going to want to do is add some indicators to your
34. 1:54chart to give you a visual representation of what's actually going on
35. 1:57with the momentum, this is strictly momentum trading.
36. 2:00The first indicator that you're going to want to have up on the screen
37. 2:03is the RSI typing RSI to the indicators tab.
38. 2:07It is the relative strength index post are next to.
39. 2:09It should be one of your favorites.
40. 2:11It looks like this or his mind as if you'd like yours to look like
41. 2:15this ad the RSI and click on the little settings, wheel change the
42. 2:19artist's eye color to yellow in accordance with the color theme of the
43. 2:22channel, change the upper band and the lower band 250 and leave it as
44. 2:26a solid line and leave the standard input as 14.
45. 2:30I like to have three moving averages up there, smooth, moving,
46. 2:33averages the 21, 250 and the 200 just so I can get
47. 2:37Their idea of what the prices doing it for trending up or trending
48. 2:40down.
49. 2:40So now that we've got that set up, we look at our levels, we see these
50. 2:44key levels of support and key levels of resistance.
51. 2:46So we saw the price come down here to $33,762 reject off of it.
52. 2:54And then came back down to test again, and how do you know if the
53. 2:57price is actually going to stop here or continue down?
54. 3:00You wait for rejection off of that level.
55. 3:03And then, once that rejection has happened with this big, huge green
56. 3:08candle.
57. 3:08You look at the RSI you clearly see here, we had a level and a level.
58. 3:14This is completely flat and parallel.
59. 3:17However, looking at the RSI we saw a low Point here and a higher low
60. 3:22here, creating a Divergent, meaning that instead of them being on the
61. 3:26same level, one is higher or lower.
62. 3:29It's easy to tell you take your little trendline tool and you see that
63. 3:34that is not level yet.
64. 3:36These two are
65. 3:37Level meaning that the momentum has diminished and we should see a
66. 3:40pump to the upside.
67. 3:41So once you saw this rejection candle, you're comfortable taking a
68. 3:44long position.
69. 3:45How do we do that, wherever you enter in on this candle, you set your
70. 3:49entry price and a stop loss below the bottom of the WIC and you're
71. 3:53looking for about a 1/2 to risk reward ratio.
72. 3:55That's it right here.
73. 3:57You got 200 points off of this one rejection, one more example and
74. 4:01that's it like we have a level here.
75. 4:02We're waiting for the price to come back up and test this Zone.
76. 4:06It did it again, we got a rejection, we see it perfectly horizontal,
77. 4:09it's on the same exact level so we take a look at our RSI and we see
78. 4:14this high and this one's actually lower drawing a trend line across
79. 4:19that.
80. 4:19You can see it is not horizontal meaning that that should go on the
81. 4:23downside.
82. 4:24You place, your short position with a stop loss above the Wicks and
83. 4:27you're looking for a 1 to 2 and again you got like another hundred
84. 4:30forty points off of this one move and again, it only works on higher
85. 4:34time frame.
86. 4:35These are long-term tree
87. 4:37The reason is on higher time frames.
88. 4:39You have a clear indication of actual support and resistance levels.
89. 4:42So if you guys are still watching this video, that means that you like
90. 4:45the video to be like the video, just smashed the big thumbs up button
91. 4:48right down there, but essentially, if you guys are getting onto your
92. 4:51charts and marking up support and resistance levels do this and then
93. 4:55keep an eye out for injections off of those levels than take a glance
94. 4:59at your RSI and know that you can get in on your long or short
95. 5:02position.
96. 5:03Now, the long-term trading isn't your style and you want a good
97. 5:06scalping video.
98. 5:07Check out this video on scalping right here.
99. 5:10And if you guys enjoy the way I teach, and you want to see more videos
100. 5:13like this, consider subscribing to the channel, by clicking this
101. 5:16button right here.
102. 5:17Hope I was able to help you guys out.
103. 5:19Thank you so much for watching and we will see you in the next video.