# Technically Speaking: Reversal and Bounce Patterns | Cameron May | 9-16-19

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Simple Moving average averages. And it's going to be the relationship. Of those two that. Might provide a technical, trade or some insight into the, current trend. So. I'm gonna click on the Edit Studies icon, we're. Going to type in the word simple, for. Simple moving average, now again if. You're not terribly comfortable with, technical, analysis, if you're just getting started with charting, what, I would definitely, recommend that you do is check out my, presentation. I started to promote myself but I actually just happen to be the one who teaches this session that's titled getting, started with technical, analysis, and that's. Every. Monday morning 11 o'clock Eastern Standard Time, but. Let's choose simple here and I'm gonna go to simple moving average, and I'm gonna add two, simple. Moving averages, to our chart and then, we're gonna customize, these I'm. Gonna come over here to the edit icon it, looks like a little gear let's, change this first moving average to, a 10, period. Moving average and, I'm gonna change that one to red. And let's, make it nice and thick so everybody can see it I'm gonna change the width to a five on a scale of one to five we'll, click okay and. The second moving average click. On the little gear icon we're. Gonna change that to a forty period moving average I'm. Going to leave that one green to, distinguish it from the red ten, period moving average but. I'm gonna change its width to five, click. OK again and then, click apply, and what we'll see now on. The chart, are two, lines now the the the, purpose, of these lines the conceptual. Purpose here is to identify an. Intermediate. Trend and a, short-term, trend so, the intermediate is is. Drawn, using a period of right now forty, days. This. Short term is, constructed. Using a period of ten days but, I'm gonna switch this up to. A weekly, time frame so I'm gonna come to our time frame and how, about you. Know what let's go to a one-year chart but I'm gonna switch this to weekly. There. We go and, then click OK and some. Of you may. Actually I might even need to go to a longer term chart how about we come up here go, to the default. 3-year, weekly chart there we go. But. Some of you may already be familiar with, this. Particular, pairing. Of moving. Averages, a 10-week, versus, a forty week and what, some technicians, will look for is when, the ten crosses, up and through the, 40 that. Might be an entry, that a that. A downward, sloping, trend is strengthening. Into bullishness if you, have the 10 week. Crossing, back down through the 40 as it, did right here that, may indicate that a previously, established upward. Trend is weakening. Into, bearishness. All. Right so the most recent example here with a wk, is the, 10 crossing up above, the 40 so, Paul Arturo Ricardo, Alfred, Michelle I have a question for you what, do we call that when, the 10 crosses up above the 40 when, the shorter, term trend strengthens. Enough that, it seems to now be encroaching on the longer term trends, bearish. Territory, maybe pushing it up into bullishness what, do we call that 10, crossing up above the 40. That is known as a. Golden. Cross now I didn't give it that name I always say that somebody had a flair for the dramatic, when, they named that but. A golden cross at least the titling, paints, the correct intended, picture it's. A hint that a trend. Is now strengthening. And that, that a technician might expect. Things to look more, bullish from there forward and in this case that's what's panned out for a wk. So. That's our example, set. Up for the day. Before, I move on from that though what do we call it when the 10 crosses down through the 40, remember. That flair for the dramatic. Now. On Johnny C's it also as momentum change could also be yes yeah. But. When we see the 10 crossing down through the 40 some. Technicians will call that a death. Cross again. Yeah pretty dramatic, kind. Of kind of morbid if you want my opinion. But. At least it paints the correct, intended, picture again it's, it's, a bearish, outlook for, that stock but in this case the, most recent, signal that we have is a, strengthening. Of the trend with, a Golden Cross and that, may set the stage so we've looked at how a technician might look for a reversal. But. Once a trend has, reversed and, is now established a, technician.

Patio For. The fourth of July or whatever right. Hanging. Out there at maybe a 45 degree angle maybe, sometimes, a little bit steeper with, a bull flag steeper. Is typically the preference versus, a shallower, rate. Of incline. So. That's a setup. But. What, we're talking about is when, do we enter what, is the bounce. Signal, so, what have you heard what's what's the typical, phrase that we use of you have you heard this before it's, a it's. An acronym, it's an abbreviation. Close, above the high of the load a hold or K hold or CA hold or however you want to pronounce a. That yeah. What a trader might look for is as. Those, profits, are taken and as the stock price falls back, they. Might look to identify the. Lowest day, in, that flag pattern, and. Maybe what I need to do here is let's clean this up for just a moment so. We're back here looking, at just the flag portion. Of the pattern and, a trader might look for the lowest day, and you. Might see here, that, red candle, is the day that stuck its tail down the lowest. Right. Yeah, Michelle Arturo. This is familiar to. You right so. There's our low day and then. A, trader, might subsequently. Look for a closing, price, above, the highest point of that low day so, if we look at that again and maybe, we need to zoom in here a little bit. All. Right let's zoom in right there so here's. Our lowest day right there. Let's. Maybe draw a, circle. Around again that again there's. The highest point of that low day and so. If a trader is looking for confirmation. That prices, have stopped going down and maybe they're starting going back up again they look for a closing price above, the high of that low day that's it. Now. You'll notice in, the four days since then did this day close, below or, did it close above that high nope. Did. This day close above that high nope, did this day close above that high nope how about this one nope. So. We don't have an entry signal yet, however. There. Is a tool that sometimes, employed by technicians, in. Anticipation. Of a bounce. Because. There. It tends to be, there's. An Asst there's, a, an.

Yeah, A technician, that at some, point may shift their focus well, geez this is getting a little bit long in the tooth because. This is no longer looking. Like it's just you know like, a ricochet, effect typically. With a bounce if you drop a ball on the ground and. It falls just, imagine instead of a nice rubber ball you drop a beanbag it. Goes boom and it just stops. Well. After a while you quit waiting for it to bounce right, it. Has revealed a, hidden. Property, that, it's not ready to bounce well, if this is gone going if this has been going sideways for, a while, we're no longer looking for a bounce what, are we looking for for, a bullish entry with a sideways, behavior. In a stock. Not. Looking for a bounce we're looking for a, breakout. Right, yeah, now, there's not hard and fast rules here, it. It's. Not uncommon, I've seen this a number of times and this can all be personal, preference so just because I say it doesn't mean that this is you, know recorded, in Trading Canon somewhere but. Generally. Speaking doesn't. Necessarily have to be the next day or even the day after that third, day may a boy were starting to get a long time, into this fourth day fifth day, six day now. It's starting to look more like a consolidation. Which, requires a breakout, rather than a bounce. That. Makes sense that. Was a good question thank you for asking all, right well. Let's go look at some other examples now, again for a wk a trader, may already be in this trade even, though they don't have a k-hole simply. Because we got that pullback, the. Anticipated. Distance, now I have some other examples that I looked at all, I did was I brought up the S&P 500 I looked for stocks that. Where the ten-week. Is trading above the 40 week indicating. Bullish. Reversal has, happened at some point in the past and we. Still have bullish can. Conditions. As as. Defined. By the ten remaining above the 40 ok now. Within, those I looked, for stocks that, have it had an acceleration. Of price recently, so. Let's see if we can see some examples here how about good old. Apple. I say good old Apple because it's one it's a big company. Has a its.