How to Do Your Own Research (DYOR) in Crypto?Hello, Traders!
Have you ever heard the phrase “Do Your Own Research,” or DYOR? No, it's neither a trendy clothing brand nor just a catchy phrase — it's an important practice. DYOR has become the primary guiding principle for crypto investors to make informed decisions. Let’s explain what DYOR means and how to conduct your research effectively.
What Does DYOR Mean? Why Is It Important?
DYOR is a call to action for investors to research and dig into the fundamentals of any asset or project before investing. Sounds simple, right? But why is it so important? Well, think about it this way: the Internet is flooded with all sorts of information, and not all of it is reliable.
So, DYOR urges you to dig deep, find the facts, and make your own decisions. It is your shield against misinformation and hype. It’s about diving deep into the project’s details and understanding its technology, team, and market potential. By researching, you’re not just relying on someone else’s opinion — you’re forming educated conclusions. Now that we’ve covered why DYOR is critical, let’s look at some of the ways traders and investors used to do proper research.
How to Do Your Own Research? How to Research a Crypto Project?
Crypto research involves using various sources and tools to get all the information you need:
– Analytical Platforms: Visit popular analytics platforms to get a first impression of the cryptocurrency. These platforms offer essential data, including market capitalization, trading volume, price history, and other key metrics.
The numbers can tell you a lot. Take social media and community channels, for example. They can give you a sense of how popular a project is. But here’s the catch: 🚩 watch out for bots and fake accounts. They can skew the numbers and paint an inaccurate picture of real interest. So, ask yourself: Is the community actively engaged? Are conversations genuine and buzzing naturally?
You also need to consider factors such as asset price, market capitalization, circulating supply, total supply, daily active users, token/coin holder distribution, and trading volume to get a sense of the project’s progress and the community’s involvement.
– White Paper Analysis: It’s a smart move to dive into a project’s core documents, like the White Paper – the project’s manifesto. It’s crafted by the team to pinpoint a problem and lay out how their product, technology, or token/coin plans to solve it. These are the sources you must explore when doing crypto research. Key points also include the technology behind it, the development team, tokenomics, and the project roadmap.
– Sentiment Analysis: It is all about working out the general mood of the market or a specific asset. By understanding how investors feel about a cryptocurrency, you can identify whether it is overvalued or undervalued. Tools like the Fear and Greed Index can help track market sentiment.
– Competitor Analysis: Analyzing competitors helps you understand the strengths and weaknesses of various projects. Compare technologies, use cases, and market performance to identify the best investment opportunities.
– Project Website and Social Media Analysis: A website should provide transparent information about the team and technology. 🚩 include poorly designed websites, missed deadlines, and a lack of transparency. Media activity can offer insights into a project's community and current status. Look out for active and engaged followers, how often the project updates, and what kind of community interactions there are.
Questions to Answer Before Investing
Before diving into any cryptocurrency investment, it's essential to ask yourself several key questions to ensure you're conducting thorough research. Here's a checklist to guide your DYOR crypto process:
What Problem Is the Project Solving?
How Does It Differ from Competitors?
Does It Follow Its Roadmap and White Paper?
What Are the Legal Regulations in Your Country?
Has It Raised Funding? Who Are the Investors?
Who Are Its Partners and Supporters?
How Is It Promoted? What Marketing Strategies Are Used?
What Are the Trends on Google and Social Media?
What Is the Tokenomics? How Are Tokens Distributed?
Are There Any Red Flags?
So, doing your own research is more than just a suggestion. Any information you can gather about a crypto project is invaluable and worth the time and effort. The more you know, the better equipped you are to make informed decisions and avoid potential pitfalls.
Remember, “Knowledge is power". As Benjamin Franklin famously said, “An investment in knowledge pays the best interest.” So, commit to your due diligence—your future self will thank you. D.Y.O.R.
Community ideas
How to Trade a Break of a TrendlineHow to Trade a Break of a Trendline
Trading broken trendlines is a critical aspect of technical analysis. Understanding how to interpret and act upon the break of trendlines can make a significant difference to a trader's performance. This FXOpen article delves into the intricacies of trading broken trendlines, providing insights, strategies, and risk management techniques to help traders navigate this essential aspect of market analysis.
Understanding Trendlines
Although you know what trendlines are, let’s briefly go over the subject. Trendlines are foundational tools used in technical analysis to visualise the direction of price movements. Drawing accurate trendlines involves selecting the appropriate highs and lows to connect, so they provide a clear representation of the prevailing trend. According to the established rules, there should be at least two highs/lows to draw a strong trendline. The more points you connect, the more solid the line is supposed to be.
There are trendlines in forex, stock, commodity, index, and cryptocurrency* charts. Still, it may be easier to find trendlines on charts of assets experiencing less price volatility.
The three primary types of trendlines are:
1. Uptrend lines connect higher lows and act as support levels. They represent bullish market conditions.
2. Downtrend lines connect lower highs and serve as resistance levels. They depict bearish market conditions.
3. Sideways or Range-Bound lines connect comparable highs and lows, indicating a range-bound or consolidating market.
Significance of Broken Trendlines
Broken trendlines create trading opportunities for traders with different trading styles and risk tolerances. Traders can employ various strategies based on trendlines with breaks, including trend continuation, trend reversal, and breakout strategies. These opportunities can provide traders with entry and exit points to take advantage of changing market dynamics.
Identification of Trend Reversals
Perhaps the key value of broken trendlines is their role in identifying potential trend reversals. When an established trendline is decisively broken, it often signifies a shift in market sentiment. This break indicates that the previous trend's momentum has weakened or reversed, which can be a vital turning point for traders.
In an uptrend, the break of an uptrend line can suggest a potential reversal to a downtrend, and conversely, the break of a downtrend line in a downtrend may signal a potential reversal to an uptrend. If the price breaks the sideways trendline, it usually reflects the end of consolidation and the formation of a new trend, either upward or downward.
In the chart above, the price broke above the downward trendline, after which a new uptrend was formed.
Confirmation of Price Movements
Broken trendlines can act as confirmation signals for other technical analysis tools and patterns. For example, when a trendline break aligns with the formation of chart patterns like head and shoulders or double top and double bottom, it may reinforce the validity of these patterns and their associated price projections.
Market Sentiment
Broken trendlines can also provide insights into market sentiment and psychology. Traders' reactions to trendline breaks can reveal their beliefs and expectations regarding future price movements, which can impact market dynamics and create trading opportunities.
False Trendline Breakout
A false trendline breakout, also known as a fakeout or failed breakout, occurs when the price of an asset appears to break a trendline but then reverses direction, often moving back within the trendline's boundaries. False breakouts can mislead traders and can result in losses for those who initiate trades based on the initial breakout signal.
Here's a breakdown of the key characteristics of a false trendline breakout:
- Initial Breakout. Initially, the price of the asset appears to break above or below a trendline. This break may even be accompanied by increased trading volume, which can provide confirmation of the breakout.
- Traders' Reactions. Many traders may interpret the breakout as a significant move and initiate trades in that direction. For example, if a downtrend line is seemingly broken to the upside, traders may start buying, expecting a trend reversal.
- Reversal. However, instead of continuing in the direction of the breakout, the price reverses course and moves back within the boundaries of the trendline. This reversal negates the initial breakout signal and can catch traders off guard.
Look at the chart above. The price broke above the falling trendline, but the uptrend didn’t form, so the downtrend resumed.
There are several reasons for false trendline breakouts, including:
- Market Manipulation: In some cases, market participants with substantial resources may deliberately manipulate prices to trigger breakouts and then reverse the market's direction to take advantage of the price swings.
- Lack of Confirmation: Fakeouts often occur when there is a lack of confirmation from other technical indicators or factors. Therefore, experienced traders look for multiple signals aligning to increase the validity of a breakout.
- Whipsawing Markets: In volatile or indecisive markets, prices can frequently whipsaw above and below trendlines, making it challenging to distinguish between genuine and fakeouts.
Factors to Consider When Trading Broken Trendlines
To reduce the risk of falling victim to false trendline breakouts, traders often use additional technical analysis tools and confirmation signals. These may include waiting for reversal signals from other indicators, monitoring price action after the breakout, and setting stop-loss orders to potentially reduce losses in case of a reversal.
Confirmation Signals
Confirmation signals can come from various technical indicators and patterns, including but not limited to:
- Candlestick Patterns. Traders look for candlestick patterns that support the direction of the breakout, such as bullish engulfing patterns for an upside breakout and bearish engulfing patterns for a downside breakout.
- Oscillators. Oscillators like the Relative Strength Index (RSI) or the Stochastic can provide overbought or oversold conditions, which may help traders confirm the strength of the move.
- Chart Patterns. Aside from candlestick patterns, chart formations, such as flags, triangles, or pennants, that coincide with the trendline break may provide additional confirmation.
Volume Analysis
Analysing trading volume is a crucial component of evaluating broken trendlines. Volume can provide insights into the significance of the breakout and whether it is more likely to be genuine or a false signal.
A breakout with increasing volume is generally seen as more reliable. It suggests that market participants are actively involved in the move, increasing the chances of a sustained trend.
Conversely, a breakout with decreasing volume may be less reliable, as it indicates a lack of enthusiasm among traders and raises the possibility of a false breakout.
Timeframes
Considering multiple timeframes is essential when trading broken trendlines. Different periods may provide different perspectives on the trendline break, and using a combination of them may enhance decision-making. Here's how traders approach timeframes:
- Higher Timeframes. They start by analysing higher timeframes (e.g., daily or weekly) to identify the primary trend direction. This provides context for the trendline break observed on shorter timeframes.
- Lower Timeframes. Market participants use lower timeframes (e.g., hourly or 15-minute charts) for finer entry and exit points. These shorter timeframes may help pinpoint optimal trade execution levels after the trendline break.
- Confluence. Traders seek confluence between different timeframes. When a trendline break aligns with a breakout on higher timeframes, it adds strength to the trade signal.
Support and Resistance Levels
When trading broken trendlines, it's crucial to consider nearby support and resistance levels. These levels can influence price movements and provide valuable context for trade management.
Fibonacci Retracement and Extension Tools
Fibonacci retracement and extension levels can complement trendline analysis. If the price breaks the Fibo level after a trendline breakout, this may confirm the strength of the newly forming trend.
Risk Management and Position Sizing when Trading Trendline Breakouts
Effective risk management is paramount when trading trendline breakouts. When trading with trendlines, potential profits and losses can be determined via these techniques:
- Setting Stop Losses. Setting appropriate stop-loss orders is a crucial component of risk management strategies.
- Proper Position Sizing. Position sizing is a critical aspect of risk management, especially when trading trendline breakouts. It determines the amount of capital allocated to each trade and helps control exposure to potential losses.
- Risk-Reward Ratios. Risk-reward ratios are essential for evaluating the potential effectiveness of a trade relative to the risk taken.
Common Mistakes to Avoid when Trading Trendline Breakouts
Common mistakes when trading trendline breakouts include making decisions based on insufficient confirmation signals, ignoring fundamental factors, and being guided by emotions. By implementing a disciplined approach and being aware of these pitfalls, traders may increase their chances of making informed trading decisions.
Ignoring Confirmation Signals
One of the most common mistakes traders make when trading trendline breakouts is ignoring confirmation signals. Relying solely on the trendline break itself can lead to premature or misguided trades.
Overlooking Fundamentals
While technical analysis plays a significant role in trading trendline breakouts, overlooking fundamental factors can be a costly mistake. Traders consider the broader market context and macroeconomic factors that may impact the assets they trade. Fundamental events like economic releases, earnings reports, or geopolitical developments can influence market sentiment and override technical signals.
Emotional Trading
Emotional trading is a common pitfall for traders, and it becomes particularly pronounced when trading trendline breakouts. Emotions such as fear and greed can lead to impulsive decisions and erode trading discipline.
Final Thoughts
The ability to trade broken trendlines is a valuable skill for market analysts and traders. Understanding the basics of trendlines, recognising their significance, and implementing effective trendline strategies and risk management techniques may lead to more sound trading outcomes. It's essential to approach broken trendline trading with discipline, patience, and continuous learning to navigate the complexities of financial markets effectively.
*At FXOpen UK and FXOpen AU, Cryptocurrency CFDs are only available for trading by those clients categorised as Professional clients under FCA Rules and Professional clients under ASIC Rules, respectively. They are not available for trading by Retail clients.
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
How Tesla Stock Rebounded Back to Green After 40% Loss in 2024EV king powered higher over the past couple months, charged on hopes of returning growth even as returning growth is nowhere to be seen. But does it matter? Let’s find out.
Tesla Erases 40% Drop in Electrifying Rally
Tesla stock (ticker: TSLA ) is on a tear. A powerful comeback has shut the haters’ mouths as the electric-car maker is up about 80% from its 2024 nadir back in April. In other words, more than $350 billion have been added to Tesla’s market cap in the span of a couple months.
What’s driving the electrifying charge in the popular auto maker, arguably the most popular ? It’s a bunch of factors. But more than anything, it’s investors’ big expectations over returning growth after the car company’s shares were begging to be scooped up by bargain hunters.
Tesla stock had slumped about 40% on the year through late April while other big tech giants were busy logging records and getting AI drunk. Take Microsoft (ticker: MSFT ) or Nvidia (ticker: NVDA ). Or any of the Magnificent Seven members. They’ve all been celebrated over prospects of artificial intelligence-driven gains.
The apparent disconnect between Tesla and the rest of the Mag 7 crew is no longer there. After stringing up a winning streak of eight straight days of winnings through Friday, Tesla shares managed to reel out of their deep 2024 losses and move in the green by about 1%.
Deliveries Fuel Investors’ Long Bets
Better-than-expected delivery figures underpinned the recent leg up. The Elon Musk-led company shipped 443,956 vehicles globally in the three months ended June, a 4.8% decline from the same quarter last year. And while this drop, the second one in a row, indicated that the business of deliveries didn’t grow, investors got excited about the consensus-beating numbers. Analysts anticipated 439,302 delivered units. It was also better than the first-quarter delivery figure of 386,810 .
Optimism about artificial intelligence is also a key factor in steering the share price higher. It’s worth mentioning that Tesla, which recently started churning out profits , has decreased its production rate and manufactured about 411,000 vehicles in the last quarter. Lower production count translates to lower inventories, reduced costs and less pressure to cut prices in order to get rid of cars gathering dust in factories.
All that means the company could splurge some cash on other projects in the pipeline and a refresh of existing ones.
Elon Musk + AI + Promises = Profits???
The advance of robots and AI-powered assistants is among the top priorities for Elon Musk. Tesla’s second-generation humanoid robot Optimus debuted last week at Shanghai’s 2024 World AI Conference. First released in 2021, Optimus was designed as an everyday AI assistant to help out with things like carrying stuff, cleaning up and cooking. Before it’s launched to the public, Tesla plans to test it out in its factories starting in early 2025.
To this, Elon Musk had only one thing to do — slam the short sellers and send them into “obliteration.”
”Once Tesla fully solves autonomy and has Optimus in volume production,” Musk wrote on X, “anyone still holding a short position will be obliterated.” He went further to call out one specific Tesla permabear — Bill Gates .
Buyer Beware!
Now on to some concerning reality checks that can make you think twice before plowing your hard-earned money into the EV maker. Tesla’s fleet of vehicles is aging badly. The Model Y is just about to pop the confetti for its fifth birthday. A lack of innovation into Tesla’s best-selling models may strip some of the company’s brand recognition for slick-looking, ultra-modern EVs.
What’s more, Tesla faces fierce competition from the East. China’s biggest maker of electric cars BYD (ticker: 1211 ), sold a record number of electric and hybrid cars in the last quarter. And it’s threatening to overtake Tesla as the world’s top EV manufacturer.
In June, Tesla’s market share in China dwindled by a worrying 24% from a year ago while the broader sales numbers went up thanks to the rollout of cheaper EV alternatives. BYD’s sales rose 24% in the second quarter to 426,039 EVs.
We Want to Hear from You
Can Tesla continue its run and keep the profits flowing to fund its risky bets on AI? Judging by the share price increase, investors seem to think so. What do you think?
Let us know in the comments below.
Silver: Thoughts and Analysis Today's focus: Silver
Pattern – resistance stall, continuation
Support – $28.70
Resistance – $31.30
Hi, traders. Thanks for tuning in for today's update. Today, we are looking at Silver on the daily chart.
As per most reports, we have started looking out, highlighting the main trend and key points before moving into the current price action. Looking at the current break higher and resistance point, will we see the current continuation contnue?
We have run over what we are looking for to confirm this and some warning signs to watch out for as well.
Good trading.
How to Plot Head & Shoulders Pattern on TradingViewWelcome back, Traders!
We’re excited to have you here on TradingView where we share valuable trading insights and educational posts to help you succeed in the markets. Today, we’re diving into one of the most reliable chart patterns in technical analysis: the Head and Shoulders pattern. Understanding and identifying this pattern can significantly improve your trading strategy, whether you’re dealing with forex, stocks, or commodities.
What is the Head and Shoulders Pattern?
The Head and Shoulders pattern is a bearish reversal pattern that indicates a potential end to an uptrend and the beginning of a downtrend. It consists of three peaks:
Left Shoulder: The first peak followed by a decline.
Head: The highest peak followed by a decline.
Right Shoulder: A peak similar in height to the left shoulder, followed by a decline.
The neckline is the support line that connects the lows after the left shoulder and the head.
How to Trade the Head and Shoulders Pattern:
Identify the Pattern: Look for the three distinct peaks with the head being the highest.
Draw the Neckline: Connect the lows after the left shoulder and the head to form the neckline.
Entry Point: Enter a short position when the price breaks below the neckline.
Target: Measure the distance from the head to the neckline and subtract this distance from the breakout point to set your target.
Stop Loss: Place a stop loss above the right shoulder to manage your risk.
Inverse Head and Shoulders Pattern
Conversely, the Inverse Head and Shoulders is a bullish reversal pattern signaling the end of a downtrend and the start of an uptrend. It consists of three troughs:
Left Shoulder: The first trough followed by a rise.
Head: The lowest trough followed by a rise.
Right Shoulder: A trough similar in depth to the left shoulder, followed by a rise.
The neckline is the resistance line connecting the highs after the left shoulder and the head.
How to Trade the Inverse Head and Shoulders Pattern:
Identify the Pattern: Look for the three distinct troughs with the head being the lowest.
Draw the Neckline: Connect the highs after the left shoulder and the head to form the neckline.
Entry Point: Enter a long position when the price breaks above the neckline.
Target: Measure the distance from the head to the neckline and add this distance to the breakout point to set your target.
Stop Loss: Place a stop loss below the right shoulder to manage your risk.
Follow us on TradingView for more helpful ideas and educational posts!
Stay tuned as we continue to share insights that will help you on your trading journey. Happy trading! - BK Trading Academy
How to Trade on Support and Resistance ReversalsHow to Trade on Support and Resistance Reversals
Trading in the financial markets can be a complex endeavour, but it may become more manageable when traders have a solid grasp of support and resistance levels. Recognising support and resistance reversals is a crucial skill that may enhance one's trading performance. In this FXOpen article, we will learn the types of support and resistance and consider some trading strategies based on market reversals.
Recognising Support and Resistance Reversals
It’s unlikely you will need to ask, “What are support and resistance lines?” Still, let’s refresh your memory.
A support line is a level at which an asset's price tends to find buying interest, preventing it from falling further. In other words, it's where demand for the asset is strong enough to counteract selling pressure. Traders often identify support as a potential point when going long or a take-profit target when selling. It can be formed at various price points on a chart and can be horizontal and diagonal (trendlines).
A resistance line is a level at which an asset's price tends to encounter selling pressure, preventing it from rising further. It represents a point where supply exceeds demand, leading to potential reversals or pullbacks. Traders often identify resistance as a potential point when going short or a take-profit target when buying. Like support, resistance levels can also be horizontal, diagonal, or coincide with round numbers.
Support and Resistance: Types
There are various types of support and resistance, including trendlines, round numbers, Fibonacci retracements and extensions, pivot points, and dynamic lines.
Trendlines
Trendlines are one of the most fundamental tools in technical analysis. They are lines drawn on a price chart to connect consecutive lows and consecutive highs to identify the direction of the market. Trendlines act as support and resistance, helping traders identify potential reversal points and trend continuations. The intersection of price movements with trendlines often signifies significant market sentiment shifts.
There are three fundamental types of trendlines:
- Uptrend Lines: Uptrend lines connect a series of higher lows and function as support levels on a price chart. These lines are indicative of bullish market conditions, signifying a consistent upward trajectory in asset value. Traders often use uptrend lines to identify potential entry points for long positions.
- Downtrend Lines: Downtrend lines link lower highs and act as resistance in technical analysis. They reflect bearish market conditions, suggesting a persistent downward trend in asset value. Downtrend lines are valuable for traders looking to establish potential entry points for short positions.
- Sideways or Range-Bound Lines: Sideways or range-bound lines connect comparable highs and lows, illustrating a market in a state of consolidation or trading within a defined range. These lines indicate the lack of strong trends in either direction and are essential for traders to recognise when markets are moving sideways.
Closest Swing Points
Traders can draw support and resistance through the most recent swing point.
- Support: To find a support level based on the closest swing point, traders identify a recent swing low. This low point is where buying interest emerged previously.
- Resistance: To determine a resistance level based on the closest swing point, traders look for the recent swing high. This high point is where selling pressure halted a previous uptrend.
Round Numbers
Round numbers are psychological levels that often serve as support or resistance. They tend to attract the attention of traders and investors due to their simplicity and significance. For example, in a currency pair like EUR/USD, a round number might be 1.2000. These levels can act as barriers where traders make decisions to buy or sell, making them essential reference points in technical analysis.
Fibonacci Retracements and Extensions
Fibonacci retracement and extension levels are based on the Fibonacci sequence and are used to identify potential support and resistance zones. The most commonly used Fibonacci retracements are 23.6%, 38.2%, 50%, and 61.8%. Traders apply these levels to charts to determine where price reversals or corrections may occur. Fibonacci extensions are key tools in technical analysis used to project potential price targets beyond the original trend. The most commonly used levels are 161.8%, 261.8%, and 423.6%.
Pivot Points
Pivot points are calculated levels that help traders identify critical support and resistance points. They are used to determine potential price reversals or breakouts. Traders often look at multiple pivot point levels, including support 1 (S1), support 2 (S2), resistance 1 (R1), and resistance 2 (R2), to gauge the market's sentiment and make trading decisions accordingly.
Dynamic Lines
Dynamic support and resistance are not fixed on the chart but change with market conditions. Common examples include moving averages and Bollinger Bands. Moving averages can act as dynamic support or resistance depending on their positioning relative to the current price: if the price is above the MA, the moving average serves as a support, while if the price is below the MA, the moving average can be used as a resistance. Bollinger Bands consist of a middle band (the moving average) and upper and lower bands that represent dynamic support and resistance zones based on price volatility.
Trading Strategies for Support and Resistance Reversals
Below, you will find two of the most straightforward strategies you can apply to various markets and timeframes.
Bounce Trading Strategy
Objective: To capitalise on confirmed support or resistance by entering positions when the price bounces off these levels.
Entry Point:
- Long Trade (Support Bounce): Traders may wait for the market to approach a strong support level. They always look for a confirmation signal, including a bullish candlestick pattern, such as a hammer or engulfing pattern, or a technical indicator. You may enter the trade at the opening of the next candle after the bullish confirmation signal.
- Short Trade (Resistance Bounce): The trader may wait for the market to approach a robust resistance level. They always look for confirmation with a bearish candlestick pattern, such as a shooting star or bearish engulfing pattern, near the resistance level or a technical indicator. You may enter the trade at the opening of the next candle after the bearish confirmation signal.
Exit Point:
- Take Profit: Traders might set a take-profit order at a reasonable distance from their entry point, aiming for a risk-reward ratio of at least 1:2.
- Stop-Loss: One common practice you may consider is to place a stop-loss order just below (for long trades) or above (for short trades) the support or resistance level you are trading. This may help protect against significant losses if the market moves against your trade.
Look at the chart above. A trader could initiate two trades on the support level. In the first one, they could get confirmation from consecutive candles with small or non-existing lower shadows and rising bullish volumes. In the second trade, they may get confirmation from the Bollinger Bands as the lower band is aligned with the support level.
Pullback and Retest Strategy
Objective: To enter trades on pullbacks to previously broken support or resistance levels, which may now act as new support or resistance.
Entry Point:
- Long Trade (Resistance Turned Support): Traders wait for the price to break significant resistance and retrace to retest it as new support. To confirm a successful retest, you may look for reduced volume and bullish candlestick patterns. To enter a trade, you may wait for the next candle after the retest confirmation to open.
- Short Trade (Support Turned Resistance): Traders wait for the price to break substantial support and retrace to retest it as new resistance. You may ask, “If the price is dancing above the support zone but hasn't broken below it, what should we do?” To make the strategy work, you will need to wait for a breakout and confirm the retest. To get a confirmation signal, you may look for reduced volume and bearish candlestick patterns. An entry point may be initiated when the next candle after the retest confirmation opens.
Exit Point:
- Take Profit: You may set a take-profit order based on your desired risk-reward ratio, considering the potential price target based on the recent significant swing point.
- Stop-Loss: Traders usually place a stop-loss order just below (for long trades) or above (for short trades) the retested support or resistance level to manage risk.
In the chart above, a trader could enter a trade on a retest of a broken resistance level that turned into support. Rising bullish volumes on a support point could serve as a confirmation signal.
Common Pitfalls to Avoid
Trading on support and resistance reversals may be a rewarding strategy, but it's essential to steer clear of common pitfalls that may lead to losses. Here are three significant pitfalls to avoid:
- Overtrading. As the support and resistance reversal strategies are straightforward and conditions for them can be found on almost any market and any timeframe, traders may fall into an overtrading trap. Overtrading occurs when traders execute an excessive number of trades, often driven by the fear of missing out or the desire for quick profits.
- Ignoring Fundamental Analysis. While technical analysis plays a crucial role in trading support and resistance reversals, ignoring fundamental analysis can be a significant pitfall. Economic data releases, geopolitical events, or company news can lead to unexpected market moves.
- Neglecting Risk Management. Neglecting risk management is a critical mistake that traders should avoid, regardless of their strategies. Failing to implement proper risk management can result in substantial losses that outweigh gains.
Final Thoughts
Understanding the various types of support and resistance, including trendlines, round numbers, Fibonacci retracements and extensions, pivot points, and dynamic levels, is essential for traders and analysts to make informed decisions in the financial markets. These tools offer valuable insights into potential market reversals and overall market sentiment. Support vs resistance trading strategies are straightforward and may be applied to almost any market. If you want to test them, open an FXOpen account and enjoy trading in over 600 markets on the TickTrader platform!
This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.
Setup SundayHello traders!
Here we are again with another Setup Sunday!
We had some amazing last 3 weeks, only profits!
For the next week there are a lot of great potentials again and yet again a nice profit on gold with my strategy :)
Check out the video and let me know what you think!
Good luck everybody!
Happy trading :D
TURN BY TURN: IS XRP A BITCOIN HEDGE?XRP, the digital currency created by Ripple Labs, is often discussed in the context of its potential as a hedge against Bitcoin ( BITSTAMP:BTCUSD ). Here’s a brief analysis of whether XRP can serve as an effective hedge.
What is XRP?
XRP is designed to facilitate fast, low-cost cross-border transactions. Unlike Bitcoin, which is primarily viewed as a store of value or digital gold, XRP focuses on enabling efficient payments and transfers between different currencies.
Correlation with Bitcoin
Market Trends:
Historically, XRP has shown a significant correlation with Bitcoin and other major cryptocurrencies. This means that when Bitcoin's price rises or falls, XRP often follows suit. This high correlation reduces its effectiveness as a hedge against Bitcoin price movements.
Volatility:
Both Bitcoin and XRP are subject to high volatility. For a cryptocurrency to act as a hedge, it should ideally exhibit lower volatility or inverse price movements compared to Bitcoin. XRP's volatility is often comparable to or even exceeds that of Bitcoin, which further undermines its potential as a hedge.
Use Case Differentiation
Payment Systems:
XRP’s primary use case is in the realm of cross-border payments and financial institution settlements, which differs significantly from Bitcoin's use as a store of value. This fundamental difference in use cases could, in theory, provide some level of diversification for investors.
Regulatory Factors:
XRP's price is also influenced by regulatory developments specific to Ripple Labs and its ongoing legal issues with the SEC. These factors can lead to price movements in XRP that are independent of Bitcoin’s price dynamics, offering a potential, albeit limited, hedge.
Market Sentiment
Investor Behavior:
Market sentiment plays a crucial role in the price movements of both Bitcoin and XRP. During periods of high market optimism or pessimism, both cryptocurrencies often move in tandem due to overall market sentiment affecting the crypto space.
Conclusion
While XRP and Bitcoin serve different purposes within the cryptocurrency ecosystem, the high correlation and similar volatility patterns between the two mean that XRP is not an ideal hedge against Bitcoin. However, its unique use case in cross-border payments and the influence of specific regulatory developments on its price could offer some level of diversification for investors. For those looking for a hedge against Bitcoin, other assets such as stablecoins or traditional financial instruments might be more suitable.
Developing Emotional Resilience: Bouncing Back from LossesOkay, fellow TradingViewers, it’s time we tackle a topic that may make you a bit uncomfortable. But, rest assured — it’s for your own good! Today, we explore the realm of emotional resilience and, more precisely, how to bounce back from losses.
Losses are inevitable. Ask anyone — even the big dogs in the industry have gone through painful losses (as you’ll see at the end of this write-up). Drawdowns so severe that they’ve nearly put hedge funds out of business (just ask Ray Dalio). And yet, bouncing back from losses is what has helped these one-time losers to develop emotional resilience and make the best out of the experience.
Acknowledge the loss, but don’t overblow it
Accept that losses happen and they’re a natural part of the trading journey. No matter how skilled or successful you are, you will have losing positions every once in a while. First, make sure you find out what went wrong. And second, don’t dwell on the losses too much and don’t let them cloud your prospects of becoming a better trader.
Size your positions according to risk tolerance
Never let a single position wipe out your entire account if it turned against you. We know how attractive it is to bet big on currencies swings spanning European countries . But keep in mind that, in such case, the old market adage "You're as good as your last trade" will hold true and it may not be pretty.
There are two main ways to prevent the wipeout of your account with a single trade — don’t bet too big (or use too much leverage). If you do bet big, make sure you have a tight stop loss that won’t let your balance get washed out and drawn underwater. Always think about defense before you think about offense.
Let your strategy take care of your trading
You won’t have to be emotional if you let your strategy take care of your trading. Having the right trading plan will eliminate the need to react on the spot and make rushed decisions out of emotion. A solid strategy can empower you to withstand even the harshest market conditions with your chin up and trading account unscathed.
Embrace the power of habit and routine
In trading, consistency is key. Create for yourself a nice and easy-to-follow trading routine. This may include making your cup of coffee before you sit to do some chart reading. Or get a workout in before you read the daily news. Whatever will help you stay disciplined and emotionally balanced — do more of that.
Invest in yourself and then trade the markets
Your most valuable asset isn’t your trading account — it’s you. Invest time in learning, reading, watching interviews of successful traders and financiers. Read books on finance and trading, study the economic calendar , or sign up for a paper-trading account to test your trading skills risk-free. The more knowledge and practice you soak up, the more resilient and prepared you will become.
Know when to step back and get a break
Sometimes, the best thing to do after a loss is do nothing at all. It’s understandable if you feel emotionally unstable, off-kilter and overwhelmed when the markets gives you a slap in the face. Especially if you’re just starting out in the volatile trading space. What to do then? Unplug, unwind, recharge. The market will still be there tomorrow — go touch grass and come back with a refreshed perspective.
Celebrate the wins — no matter how small
Trading has to be about more than just coping with losses. Give yourself a nice pat on the back for every little victory. Made a successful trade? Or even got out at breakeven thanks to your stop loss? Perfect. Recognize and celebrate these moments. They’re little milestones to remind you that you’re on the right path to success.
Loss advice from the big dogs in trading
Let’s wrap up some with loss advice from the world’s best traders and see how they dealt with the blows of Mr. Market.
Paul Tudor Jones , hedge fund manager: “Losses are not your problem. It's how you react to them. Ignore losses with no plan, or try to double down on your losses to recoup, and those losses will come back like a Mack truck to run over your account.”
Ray Dalio , founder of the world’s largest hedge fund Bridgewater, on how he viewed a near-bankruptcy experience: “I needed to balance my aggressiveness and shift my mindset from thinking ‘I’m right’ to asking myself, ‘How do I know I’m right?’ It was very, very painful, yet it changed my way of thinking. It was one of the best things that ever happened to me.”
George Soros , pioneer of the hedge fund industry: “It’s not whether you’re right or wrong, but how much money you make when you’re right and how much you lose when you’re wrong.”
Let’s hear from you
How do you usually deal with a trading loss? What’s the best thing a loss has taught you? Comment below and let’s spin up a nice discussion!
Applying a Champions Mindset to TradingWith the Wimbledon tennis championships starting this week, it seems only appropriate that we take inspiration from tennis GOAT Roger Federer, whose wisdom extends far beyond the court.
It’s Only a Point
In a recent speech at Dartmouth College in the US, Roger Federer, a 20-time major winner, shared insights from his tennis career that resonate deeply with those pursuing success in day trading:
“In the 1,526 singles matches I played in my career, I won almost 80% of those matches. Now, I have a question for you, what percentage of points do you think I won in those matches? Only 54%. In other words, only top-ranked tennis players win barely half of the points they play.”
These words, while referring to tennis, hold a mirror to the experience of highly successful day traders, who can finish profitable on 80% of trading days but manage win/loss ratios hovering around 50%. Losing frequently is a reality they manage with resilience and strategy.
“When you lose every second point on average, you learn not to dwell on every shot… When you play a point, it has to be the most important thing in the world, but when it’s behind you, it’s behind you. This mindset is crucial because it frees you to fully commit to the next point and the next point after that with intensity, clarity, and focus.”
The Psychology of Champions
Elements of Federer’s tennis speech touches the core of elite trading psychology. Mastering each trade with intensity, clarity, and focus, while maintaining detachment from individual outcomes, forms a clear pathway to success.
“You want to become a master at overcoming hard moments… The best in the world are not the best because they win every point; it’s because they know they will lose again and again and have learned how to deal with it.”
Practical Applications of Federer’s Mentality
Here are practical tips on applying a champion’s mindset to your trading:
• Focus on Process Over Outcome: Emphasise executing your trading plan flawlessly rather than fixating on individual trade results. This approach aims to cultivate discipline and consistency, enabling you to make decisions based on logic and strategy rather than emotions.
• Learn from Losses: Traders applying this mindset can look to use losses as opportunities to refine their strategy and improve decision-making.
• Maintain Emotional Balance: Try to avoid letting wins or losses dictate your emotional state. Developing techniques such as mindfulness or journaling can help to manage stress and keep your emotions in check.
• Commit to Continuous Improvement: Just as Federer constantly evolved his tennis game, traders could embrace continuous learning and adaptation in trading.
• Resilience in Hard Times: Developing mental toughness to navigate challenges takes time. Traders could look to build a support system, whether through mentors, trading communities, or personal networks, to help you stay motivated and resilient.
Conclusion
While the parallels between trading and tennis can only go so far, the psychological insights of a true champion should not be underestimated. By adopting a mindset that prioritises process, resilience, and continual improvement, traders are better placed to navigate the complexities of the market with confidence and clarity.
As Wimbledon unfolds, let Federer’s wisdom inspire you to approach your trading with the same intensity, focus, and strategic clarity that defines a champion.
Disclaimer: This is for information and learning purposes only. The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance. Social media channels are not relevant for UK residents.
10-Year T-Note vs. 10-Year Yield Futures: Which One To Trade?Introduction:
The 10-Year T-Note Futures and 10-Year Yield Futures are two prominent instruments in the financial markets, offering traders unique opportunities to capitalize on interest rate movements. This video compares these two products, focusing on their key characteristics, liquidity, and the differences in point and tick values, ultimately helping you decide which one to trade.
Key Characteristics:
10-Year T-Note Futures represent a contract based on the value of U.S. Treasury notes with a 10-year maturity, while 10-Year Yield Futures are based on the yield of these notes. The T-Note Futures contract size is $100,000, while the 10-Year Yield Futures contract size is based on $1,000 per index point, reflecting a $10 DV01 (dollar value of a one basis point move).
Liquidity Comparison:
Both 10-Year T-Note Futures and 10-Year Yield Futures are highly liquid, with substantial daily trading volumes and open interest. This high liquidity ensures tight spreads and efficient trade execution, providing traders with confidence in entering and exiting positions in both markets.
Point and Tick Values:
Understanding the point and tick values is crucial for effective trading. For 10-Year T-Note Futures, each tick is 1/32nd of a point, worth $31.25 per contract. The 10-Year Yield Futures have a tick value of 0.001 percent, worth $1.00 per contract. These values influence trading costs and profit potential differently and are essential for precise strategy formulation.
Margin Information:
The initial margin requirement for 10-Year T-Note Futures typically ranges around $1,500 per contract, while the maintenance margin is slightly lower. For 10-Year Yield Futures, the initial margin is approximately $500 per contract, reflecting its lower notional value and DV01. Maintenance margins for yield futures are also marginally lower, providing traders with flexible capital management options.
Trade Execution:
We demonstrate planning and placing a bracket order for both products. Using TradingView charts, we set up entry and exit points, showcasing how the different tick values and liquidity levels impact trade execution and potential outcomes.
Risk Management:
Effective risk management is vital when trading futures. Utilizing stop-loss orders and hedging techniques can mitigate potential losses. Avoiding undefined risk exposure and ensuring precise entries and exits help maintain a balanced risk-reward ratio, which is essential for long-term trading success.
Conclusion:
Both 10-Year T-Note Futures and 10-Year Yield Futures offer unique advantages. The choice depends on your trading strategy, risk tolerance, and market outlook. Watch the full video for a detailed analysis and insights on leveraging these products in your trading endeavors.
When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies.
General Disclaimer:
The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
FULL ANALYSIS GUIDE - (Using ICT's Concepts)Hey guys,
In this video I will show you my process for performing analysis. Yes, it takes some work, but generally once you get into the swing of it, it doesn't take long, and the higher timeframes only require analysis once in awhile. It allows me to have a higher win-rate and be more on side with how the market is predisposed to move. Whilst it is not required in order to be profitable, my personality and system requires me to make more frequent wins.
I hope you find this video insightful.
- R2F
The TradingView Show: Breakout Charts with TradeStationWatch our latest episode of The TradingView Show and dive deep into the markets with TradeStation and their Head of Strategy. We examine breakout charts, significant money movements, and invaluable educational insights for traders of all levels.
For daily charts and research, visit the TradeStation profile on TradingView, where they share scripts and engaging charts. They're also a connected broker allowing for instant connectivity between TradeStation and TradingView. See the official TradeStation broker profile here: www.tradingview.com
The TradingView Show occurs monthly, focusing exclusively on market education and welcoming traders of all backgrounds. Each episode dives into a variety of topics, including equities, AI, crypto, gold, forex, and more, offering a comprehensive roundup of market trends and developments that are capturing traders' attention.
Please note, the TradingView Show is dedicated solely to education, offering valuable insights and lessons for traders at every stage of their journey. It is important to emphasize that the show does not provide financial advice or recommendations; its primary goal is to enhance trader knowledge and understanding through educational content, including TradingView tips, scripts, charting techniques, and social networking.
For more, please check out the compliance and disclaimers links below:
1. Important information: www.tradestation.com
2. Disclosure options: www.theocc.com
3. ETF prospectus page: www.tradestation.com
Thanks for watching! We'll see you at our next show.
Bitcoin: Double Bottom Long To 64K.Bitcoin has confirmed a double bottom within the 60K major support area. The scenario that I outlined in my previous analysis is STILL in play (see illustration on chart). An inside bar is also present on this time frame along with a break of the high of that candle. As a result of all of this, a new buy signal is in effect which can result in a test of the 64K resistance over the coming week or two.
A good question is: what is the risk associated with this long setup? Risk can be measured in a number of ways. One simple and more conservative way is to note the most recent low which is around the 59K area. A long taken now or from the low 61Ks puts the associated risk around 2K points on THIS time frame. In contrast to the potential reward around 64K, the R:R ratio is about 2:1 which makes this opportunity attractive for swing traders and investors.
Before you go nuts and start buying though, it is important to understand that just because a buy signal appears (my criteria being met) does NOT guarantee a positive outcome. I believe there is a greater probability based on my experience. Probability MEANS there is also potential for the market is go the other way as well. This is why RISK management is the key to effective management and decision making NOT "high win rates" etc. As I remind my followers regularly so unexpected news can come out and Bitcoin can be pushing 56K in a matter of hours.
Another things to watch out for is all the rocket ship talk. The "it's going to 100K by tomorrow and you are going to miss it!" nonsense. If you follow people that proliferate fear of missing out messages, stop following. Bitcoin has been in a consolidation since the March peak which has resulted in NUMEROUS opportunities on both sides of the market. There is NO reason to feel like you are missing anything, ESPECIALLY when you have a tool that helps you easily identify opportunities, clarify RISK and measure profit potential (like my Trade Scanner Pro).
Without a rational decision making framework, you become vulnerable to your own emotions of greed and fear. And this is what leads to being exploited by "experts" that you identify with and trust, along with making irrational, high risk decisions like buying when a market looks its best (aka the top).
As I remind my followers regularly, before you even assume risk, you must have a specific idea as to how you intend to exploit an opportunity in the market. Just trying to "make money" is not an enough of a reason. The market is NOT your personal ATM. It is a mechanism to transfer wealth from those who have material knowledge from those who "think" they have material knowledge. If your results over the previous year or more appear to be stagnant or random, which side do you think you're on?
Thank you for considering my analysis and perspective.
Navigating Frothy US Equities with S&P SpreadsNavigating frothiness in US equities requires both caution and tact. With the S&P 500 nearing its all-time high amid flashing recession signals, investors must be vigilant with volatility during upcoming earnings season, driven by outsized expectations.
This paper explores the persistent recession indicators and forces at play during upcoming earnings. The paper posits a spread trade using CME’s Micro E-Mini futures (Long S&P 500 and Short Russell 2000) to maintain upside potential with reduced downside risk.
RECESSION RISKS PERSIST AS RATES REMAIN HIGH
On Friday, the PCE Price Index (Fed’s preferred gauge) showed inflation cooling to 2.6% in May, in line with expectations. Price pressures are slowly abating.
Numbers aside, the broader economic landscape presents a complex picture.
Signals from the job market point to unemployment claimants at a record high for the past two and a half year with job openings shrinking drastically. Personal earnings were higher than anticipated in May (0.5% vs 0.4%), but spending was below expectations. Consumers are being more cautious. Mint Finance covered these nuances in a previous paper .
Housing is flashing weakness as new housing starts hit a four-year low in May. Soaring prices and steep mortgage rates are weighing on demand.
The Fed’s policy path remains unconfirmed. However, consensus point to a rate cut as early as September. Even if that happens, rates are expected to decline gradually.
Source: CME FedWatch
Despite risk of recession, the S&P 500 has had an exemplary showing this year, trading near their all-time high. YTD performance of 15% in 2024 has been far higher than the 74-year average of 4%.
Yet, the performance has been increasingly top-heavy. Nvidia, Apple, and the rest of the tech titans have contributed much of the gains in the broad S&P500 index as it is market cap weighted. The index is heavily reliant on and sensitive to the performance of these mega-caps.
The equal-weighted S&P 500 index is up only by 4% in sharp contrast. The spread between the S&P 500 and its equal-weighted counterpart is near its highest point since 2008. The spreads between the S&P 500 and both the Russell 2000 and S&P Midcap indexes have reached multi-decade highs.
Outperformance was re-affirmed after the recent earnings season. Mega-caps crushed EPS and revenue expectations and reported phenomenal guidance while other stocks, especially utility and energy sector reported revenue and EPS figures below estimates according to FactSet report .
Rallies in mega-cap stocks are being driven by idiosyncratic tailwinds, such as advancements in AI. Meanwhile, slowing consumer spending in the US is raising concerns for the broader market.
RISK OF SHARP CORRECTION WARRANTS SPREAD POSITION
According to FactSet , Q1 earnings season was positive. Only 19% of firms reported earnings below expectations. Actual average EPS YoY growth for the index was 5.9% (above 3.4% expected as of March 31).
Frothiness in the equity market is palpable. Consistent outperformance by mega caps is baked into investor expectations. Strong earnings are already factored into prices, as evidenced by the S&P 500's P/E ratio of 28.38x (far higher than the 10-year average of 20x translating to a 42% above average earnings expectations). Average P/E ratio in the best performing tech sector is even higher at 37.47x.
Even minor shortfalls in guidance or revenue/earnings can lead to significant corrections in such a climate. The FactSet reports that 31.8% of firms which beat earnings EPS estimates by up to +5% saw average price decline of -0.9%.
Source: FactSet Research
In fact, overall, positive earnings only drove a 0.9% increase in price (1% 10Y historical average) while a negative earnings report led to 2.8% drop (-2.3% 10Y historical average).
Source: FactSet Research
Market frothiness elevates risk of a sharp price correction in single names during Q2 earnings. Analysts are concerned as expectations for Q2 EPS YoY growth have been lowered from 9% on 31/March to 8.8% as of 22/June.
Despite this, mega-caps remain in solid position. Robust demand for AI, buoyant advertising revenue, globalized revenue streams, and substantial market dominance have positioned them to continue growing at a disproportionate rate.
In case the upcoming Q2 results pan out similarly to Q1 in favor of mega-caps, the S&P 500 will continue to outperform the broader market indices.
HYPOTHETICAL TRADE SETUP
The S&P 500, with its high concentration of mega-cap stocks, is likely to perform better than broader market indices in the coming earnings season. However, recession signals are also flashing.
The S&P 500 does not perform well during recessions. Over the last four recessions, it has declined an average of -14%. Comparatively the spread between S&P 500/Russell 2000 spread has increased 1.7%.
The S&P 500/Russell 2000 spread has also outperformed during the six-month preceding recessions.
Given the S&P 500-Russell 2000 spread's historical outperformance during recessions, a spread position presents less downside risk compared to an outright long position in the S&P 500.
This strategy also maintains a bullish outlook on the top-heavy S&P 500's potential to outperform in the upcoming season.
Moreover, the spread trade preserves the upside potential in the ongoing rally, as its performance has been comparable to an outright long position in the S&P 500.
A view on the spread between the S&P 500 and Russell 2000 can be expressed using CME Micro E-Mini Equity futures. At 1/10th the size of the full-size E-mini futures, the Micro contracts allow for smaller trades with more granular exposure.
A long position in the Micro E-Mini S&P 500 futures expiring in September (MESU2024) can be offset by a short position on 2 x Micro E-Mini Russell 2000 futures expiring in September (M2KU24). This position is highly margin-efficient as CME offers margin credit for this spread.
Hypothetical trade set up in summary requires entry at 2.69x, with a target at 2.78x coupled with stop loss at 2.6x.
The simulated payoffs are described below.
MARKET DATA
CME Real-time Market Data helps identify trading set-ups and express market views better. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
DISCLAIMER
This case study is for educational purposes only and does not constitute investment recommendations or advice. Nor are they used to promote any specific products, or services.
Trading or investment ideas cited here are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management or trading under the market scenarios being discussed. Please read the FULL DISCLAIMER the link to which is provided in our profile description.
Amazon at $2 Trillion: What’s Driving the Stock to Record Highs?Tripled profits, a bet on AI, and a strategy to take on rising rivals from the East have propelled the ecommerce and cloud computing giant to the lofty price tag.
Innovation on Amazon’s Mind
Amazon (ticker: AMZN ) hit $2 trillion in market value just before the year clocked out for the first half. In the final week of June, the Jeff Bezos-founded online retailer soared past the formidable milestone, becoming the fifth company to ever breathe the rarefied air beyond $2 trillion.
What’s been driving Amazon stock to line up right after Alphabet (ticker: GOOGL ), Nvidia (ticker: NVDA ), Apple (ticker: AAPL ) and Microsoft (ticker: MSFT )? It’s a mix of fortunate and timely events, and all can be summed up with one word: innovation.
Amazon raked in sky-high profits of $15 billion for the most recent quarter. The figure was up three times from the same quarter last year. More importantly, the company, now under the stewardship of Andy Jassy as chief exec, is pivoting more resources to meet the growing demand for artificial intelligence.
Shifting Focus to Artificial Intelligence
Amazon Web Services (AWS) is the firm’s cloud computing business and also the world’s biggest one. It’s largely the cash cow at Amazon with profit margins as wide as 38%. Now, it’s getting a boost from businesses looking to inject AI into their products and services. The fast-growing AI-focused unit is growing at a “$100 billion annual revenue run rate,” according to Jassy.
For the quarter ended March 31, AWS sales rose 17% to $25 billion, beating forecasts for $24.5 billion and also coming ahead of the previous quarter’s 13% growth pace. It seems that the AI hype is sweeping across the Amazon halls and conference rooms.
Generative AI got praised by Amazon’s chief financial officer Brian Olsavsky as “a multibillion-dollar revenue run rate business for us.” Looking for a meaningful edge doesn’t stop with artificial intelligence.
Pitted Against Temu and Shein
Rising ecommerce competition from the East is forcing the $2 trillion giant to embrace a new line of business — ultra-low-cost goods shipped directly from China. A new discount section is in the works for Amazon.com after smaller rivals Temu and Shein have threatened to slurp up a significant market share.
The new section, according to reports, will be added to the homepage of the retailer’s app. It will be targeting American customers willing to wait nine to 11 days for goods shipped from China warehouses, as opposed to the regular one or two-day delivery time for goods delivered from within the US. Also, each item will get a price tag of no more than 20 bucks.
Temu, owned by PDD Holdings, and China-founded Shein have flooded the internet with cheap stuff and massive discounts thanks to splurging billions of dollars in advertising campaigns.
Amazon, a mainstay in the FAANG stocks list , is among the few companies to be of gargantuan size yet nimble enough to stay relevant in the changing landscape of its industry. Will the pivot to cheap goods succeed in stamping out the aggressive competition from China? Or will the corporate giant be outperformed by the brilliant maneuvering of low-caliber foreign retailers?
Share your thoughts in the comments!
NIKE - Dead or a Cheap Opportunity? Nike has been on a rough patch recently & this past week didn't help as it saw it's worst day in over 20 years.
Now the question is, is Nike dead in the water or has price gotten so cheap that it makes for a good investment opportunity?
Now, I'm not here to tell you that you should or shouldn't buy Nike, rather if you were considering it, where you may want to look to do so at & what you need to be aware of if you do.
I'd love for you guys to continue the discussion by sharing your opinions below!
And as always I wish you a fantastic week of trading and investing.
Akil
Price Action Fluency As A Second LanguageThis is the most important educational video I have shared.
Reading price action is akin to acquiring a second or foreign language. Just as fluency in a new language provides fluency and articulation, mastering price action offers traders a nuanced understanding of market dynamics. One would not expect to learn a new language in a short amount of time. It often takes years while keeping up the practice for the rest of ones life. Price action is no different.
There are literally hundreds of subtleties revealing their secrets to the ones who 𓁼 . Indicators obstructing the view of plain truth is most often a useless distraction. It's not just about recognizing patterns; it's about developing a foundational understanding that allows for intuitive and informed trading decisions.
Building this skill set enables traders to interpret market 'sentiments' and react more adeptly to volatility, much like a fluent speaker picks up on subtle nuances in conversation. Thus, learning to 'speak' the language of price action is essential for anyone serious about trading, as it equips them with the tools to navigate and succeed in the complex world of financial markets.
How to Read the MACD Indicator and Use It in Your TradingTechnical analysis is a vast field with thousands of indicators, which may be confusing to those among us who are just starting out. In this Idea, we look at one of the most popular indicators and also one of the easiest ones to fire up and start using from Day 1.
MACD (Moving Average Convergence Divergence)
MACD is arguably the most widely used indicator that can get slapped on virtually every chart out there. The indicator’s full name is Moving Average Convergence Divergence, but you don’t need to remember that.
If you need to take away one thing, it’s this: MACD is easy to read. Here’s how to do it.
Technical Side of Things
Add the MACD in your chart of choice — any chart, any time frame.
You’ll see three default numbers used to set it up — 12, 26, 9.
The 12 is the moving average of the previous 12 bars (also called faster moving average).
The 26 is the moving average of the previous 26 bars (also called slower moving average).
The 9 is the moving average of the difference between the two averages in play.
Next, you see that there are two lines that move up and down and cross each other occasionally. The two lines are:
The MACD line: the difference between the two moving averages and the “faster line”.
The Signal line: the moving average of the MACD line and the “slower line”.
Because the two lines measure price changes at different speeds, the faster one (MACD) will always run ahead and react before the slower one (Signal) catches up.
How to Trade with MACD
If all that sounds a bit complex, here’s the gist of it:
Faster line leads, slower line follows.
Faster line crosses slower line to the downside — a downward trend may be forming.
Faster line crosses slower line to the upside — an upward trend may be forming.
Technically, whenever a new trend is shaping up, the slower line should confirm it by following the faster line. And that happens when the two cross over. The way to potentially spot new trading opportunities is to look for the crossover.
This, in a nutshell, is how to read the MACD indicator and use it to help you become a more profitable trader. There's a whole plethora of MACD examples in action — dive right in !
Let us know your thoughts and experience with the MACD in the comments below!
EBS Base Breakout SetupHey everybody got my camera working for this trade idea. Here we have the ebs stock setting up for a breakout in an uptrend and we're hoping for a bullish continuation here. I describe my entry points my stop loss and my profit target one and the logic behind them and how to position your share count so you can manage your risk and prepare to lose as much or as little money that you want if the trade goes against you every decision in this trade has meaning and logic to it that pertains to the particular stock and the setup therefore you know why you are doing everything that you're doing when trading. Let me know if you have any questions or if this is new to you or if you need help setting it up or calculating how much money you should win or lose. The only issue with this stock is that it's not in the technology sector and it's not in the communication sector so it is not in the most high performing sector right now although the healthcare sector is performing pretty decently with financials as well.
Trade the TREND with 4 Trend Indicators4 Trend Indicators you can use to identify the current MACRO Trend.
It's always important to know where your market is currently trading. Is it bullish, bearish, or range trading? If you have established the trend, you can trade with the trend instead of against it. Trading against the trend ( for example shorting during a bullish cycle ) adds unnecessary risk to an already risky trade (leverage).
1) Bollinger Bands
2) Logarithmic View
3) Super Trend
4) Moving Averages + RSI
Let me know how YOU determine the macro trend!
_________________________
BINANCE:DOGEUSDT MEXC:ETHUSDT KRAKEN:BTCUSD COINBASE:SOLUSD
AUD/USD swing trade setup
This AUD/USD pair could completed its correction already
Wave (1) = diagonal
Wave (2) = complex correction W-X-Y (expanded triangle)
Wave 1-2 (expanded flat completed last night 26/6/2024) of 3
If this wave count is valid, possible short term target (days-weeks) are
1) 0.68
2) 0.694
Price should not go lower than 0.664
If it goes lower than 0.658 -> this idea will be invalidated
Looking at DXY, this bullish idea may be possible
