Technical Analysis Made Simple: Next Level Trading with Technical Indicators | James Nguyen | Skillshare

Technical Analysis Made Simple: Next Level Trading with Technical Indicators

James Nguyen, Professional Money and Lifestyle Manager

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10 Lessons (40m)
    • 1. Introduction to Technical Indicators

      3:43
    • 2. What are Technical Indicators?

      4:40
    • 3. The Classic and Powerful MACD

      4:52
    • 4. Basics of Reading the MACD​

      4:10
    • 5. The Secrets of MACD Divergences

      3:15
    • 6. Why I Don't Use the RSI (and Others)​

      3:35
    • 7. My Personal Favorite: Directional Move Index​

      2:23
    • 8. Technical Indicators In Action

      4:58
    • 9. The 3 Cs Stacking System: Trading Walkthrough

      6:52
    • 10. Bonus: The Next Step in the Stacking System

      1:29
28 students are watching this class

About This Class

What are all of those crazy lines and charts that stock traders are always looking at?

Technical indicators give any investor a huge edge in understanding stock charts. Understanding technical indicators will help you confirm and predict stock price action, and help you make smarter buy and sell decisions.

This class will give you powerful tools to help you take your investing and stock trading to the next level.

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Next Level Trading with Technical Indicators is an end-to-end guide to the most important tools in reading a stock chart. Understanding how to use technical indicators as trading signals is a key step in trading more confidently and consistently.

This class is the FOURTH in a series that will teach you the essentials of technical analysis and stock trading to help you make smart, profitable investing decisions. You’ll focus on the most important technical indicators and put it all together into a process that I actually use as a professional hedge fund manager. 

My classes are built around my Stacking System, a step-by-step process to analyze any price chart using simple, classic technical analysis.

If you can follow a recipe, you can learn my system. 

Technical analysis will give you an edge in trading, day trading and investing in anything from stocks and penny stocks to Bitcoin and cryptocurrency.

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I'm James and I've been a professional trader and hedge fund manager for over 20 years, trading billions of dollars. I'm active on Twitter using @marketmind3 and on my website marketmindtrading.com. I post trading and market analysis live, where I can't hide and fake my results.

My teaching style is focused on being simple and easy-to-follow. I'm also a big believer in using visual aids and live, video walkthroughs as often as I can, so you can look over my shoulder as I apply my concepts. 

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This class will cover the key aspects of technical indicators and how to use them to trade smarter:

  • Lesson #1: Introduction
  • Lesson #2: What are Technical Indicators?
  • Lesson #3: The Classic and Powerful MACD
  • Lesson #4: Basics of Reading the MACD
  • Lesson #5: The Secrets of MACD Divergences
  • Lesson #6: Why I Don’t Use the RSI (and Others) 
  • Lesson #7: My Personal Favorite: Directional Move Index
  • Lesson #8: Technical Indicators in Action
  • Lesson #9: The 3 Cs Stacking System: Trading Walkthrough
  • Bonus: The Next Step in the Stacking System

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Understanding technical analysis will change the way you trade and give you control and confidence over your investments. My course will transform you from a “close-your-eyes-and-hope” beginner to a smart, consistent trader. If you want to learn how to read a stock chart, understand technical analysis and trade with confidence, you’re in the right place.

Transcripts

1. Introduction to Technical Indicators: What are all those crazy lines that stock traders are always looking at while they're called technical indicators? And they're powerful tools that take your trading and investing toe a new level, and we're gonna learn them right here. Welcome to technical analysis Made simple next level trading with technical indicators This class is the fourth part of a series that will teach anyone how to analyze stock charts. Even if you're a complete beginner, imagine having tools that can make you more confident and consistent in your buys and sells . Trading without technicals is like trading with one hand tied behind your back. Technical indicators can confirm stock price trends and sometimes even predict them. And understanding them is the third step in learning my simple, repeatable process to analyse the stock index or Cryptocurrency chart and make a smart buyer cell decision. I call my system my stacking system, and we're gonna follow the three C's looking for a catalyst. Ah, chart and confirmation. We've already gone in previous classes over the previous two, sees the catalyst part where we look for breaks up trend lines or support and resistance as a trigger for our trades and then we look for chart patterns and learned to understand and identify which chart patterns or bullish or bearish to help us understand what our stock price is doing. And now we're gonna add the final piece that confirmation. We're gonna learn how to use technical indicators to confirm and predict stock price trends . This class is all about technical indicators. What are they and what do they tell you? We're gonna go over the major ones like the Mac D and the RSC as well as some under follow ones like the D. M I ones that I use on. We're gonna learn how to use them to confirm bullish or bearish chart patterns. Hi, I'm James. I teach people how to read stock charts and trade with confidence. I have 20 years of experience as a hedge fund manager. I've been in front of the screens for decades, trading billions of dollars, and I believe anyone can learn to understand technical analysis. I'm not a paper creator who learned from a textbook. I trade riel capital and post live trading and market analysis on my Twitter and Website market mind trading dot com, where I can't hide or fake my results. My process both in how I teach and how I trade is to keep it simple so you don't have to be a finance wiz or a mass genius to learn how to read a stock chart. If you can follow a recipe, you can learn my process again. This is the fourth class in a Siri's and the third part of my three C stacking system. Technical indicators are the final part that confirmation part Now, if you haven't gone over the previous classes, now might be a good time to go over them. The introduction to stock charts and technical analysis and the classes on trendline supporting resistance and trading stock chart patterns the previous to seize catalyst in charge. If you've already get seen them, let's go dive right into confirmation part understanding technical indicators In this class , we're going to dive deep into technical indicators and how to use them. We're going to focus on the Mac D, which is a simple technical indicator to use but will touch upon some of the more common ones. Like are science. Um, all the ones as well as a personal favorite of mine. The directional move index. And, of course, we're gonna use live video walk throughs at the end to show technical indicators in action and get a little preview of the full three C stacking system in action. If you want to make more money trading or increase profits from investments you're already making or understand what a chart is telling you. So you can stop guessing when you by yourself or use long term strategies so you don't have a stair and stress at your trades every minute you're in the right place right now and let's begin. 2. What are Technical Indicators?: What are technical indicators? Well, basically, they're all the lines and charts that you can add to ah stock price chart on that often a lot of times, just a company to stock price charts. When you pull them up at a charting service, you can see here instead of just a typical stock price charged simple chart. You can see all these like charts and graphs that come along with it. Ah, and so basically, these technical indicators give added insight into price action. Ah, what do they look at? What incited a give while they can give you insight into the mo mentum and the strength of trends? Ah, they can tell you overbought or oversold levels? Or is the stock price wildly overbought relative to previous levels or oversold? I could give you trading rangers. It can actually sometimes predict how strong a trend is and oftentimes predict. Turning points the way I think about technical indicators are that they're like color commentary when you're watching sports, right? So ah, as opposed to just looking at a price chart, it gives you more information about what's going on underneath the surface of price charts or a stock prices action. It gives you additional insight. Tell you not just what is happening, but how and why. Because a lot of times it doesn't really matter if the stock price is going up or down. Ah, what really matters is whether the underlying indicators are confirming the continuation of the trend or or a reversal. Ah, And again, you want to care about the how of what is happening. Not just the what, and it gives you a really good confirmation with some of the other things you might be seeing in a stock price. Technical indicators are pretty much available on any stock charting app or or website. You'll find Ah, here first, I'll look at trading view. Ah, this is the one I use. Um, and you go appeared in this corner here. Ah, kind of in the stop menu. Ah, you'll see indicators. And if you scroll down, it'll just give you, like, literally dozens of them. You can kind of see ah moving average weighted mo mentum. You don't need to know all these. Over time you will know some of the more common ones and, you know, feel Frieda to dig in and learn some of these more obscure ones. Williams are squares up column in one. I mean, look, there's literally just dozens and dozens of them, and you could just Adam to your charts. And that's kind of what Ah, what What technical analysts will dio Ah, several leave you go over a stock charts. This is another common app that people use. You'll see the basic stock chart. Ah, here's one of the indicators here. The Mac D. That's the one I use. But if you scroll down, you can. You can add whatever you want here again. If you give this menu, they just give you dozens and dozens. I don't even know what a lot of these are. Let's go the chicken oscillator and add it on. So getting it gives you some sort of indicator. So ah, there readily available. Just look for them on any stock charting app you find. So there's literally dozens and dozens of technical indicators. Eso Which ones do you want to look at? Um, you know which ones really matter. The good news is you don't really have to learn them all. In fact, I I don't know them all. Ah, and Nor do I care because first of all, the reality is that many of them tell you the same thing. And a lot of times they usually line up. So you just really need to know a couple. Ah, a couple of them. And you remember my steak example and kind of the basis of just how I look at it and how I trade stocks. Uh, you know, you don't need to have a dozens of rubs and spices and sauces and marinades. Sometimes you just need salt, pepper and heat. Ah, and so just pick a couple indicators that you are comfortable with and that's intuitive to you and that are effective and just stick with them. And the reality is, a lot of times it really just comes down to personal preference. Um, and individual experiences. Most of these technical indicators give you some insight. Ah, and you know, in some ways, the more off the more you use, the more confusing in the more information overload you have. Um, and some people just relate better to certain ones from either side psychology, point of view or an aesthetic standpoint, or just understanding kind of why it works. But regardless of what technical indicator you use, they all kind of do the same thing. They add color and insight into stock price action, and that's why they're important part of my stacking system, where they provide the confirmation of all the catalysts, trend lines and chart patterns you see and lead to better, more confident trading decisions. 3. The Classic and Powerful MACD: the Mac D stands for the moving average convergence divergence. So I'm gonna tell you what it is and how you calculated. But don't worry. You kind of really don't have to know all that. You kind of have to know just conceptually what it is and and how to use it. And I'm gonna kind of simplify how you use it at the end. So basically, the Mac D is a trend following momentum indicator. What does that mean? It basically means that it's an indicator that tells you how strong the momentum of the prices of stocks price is. Eyes the stock moving up or down at a stronger or weaker pace. So, uh, you know you'll see a back to you put an indicator alongside of a stock price. So as you're looking at stock price and it's trends and and and how it's going you the Mac D kind of adds color. Ah to stock price chart. So here's the calculation. So basically the Mac D, there's two. Ah, there's kind of two components. If you kind of look at the typical Mac D indicator right, there's, Ah, there's the Mac D line. And then there's a signal line. Okay, so in this in the chart here, this whole area down here, that my cursor is is the Mac D line or the Mac d kind of indicator. The blue is the Mac D line, the actual Mac d and then the the yellow is the signal line. Um and so basically, the Mac D is the Mac D line itself is calculated by taking the 26 period exponential moving average. Ah, and subtracting it from the the 12 period exponential moving average. And I gives you a Mac D line, and then on top of it, the signal line is just the nine day exponential moving average of the Mac D itself. On that, you kind of plotted on top of the Mac D line, and that's kind of a trigger for buying cells. So what does that mean? So basically, what you're doing is you're taking a short term trend, you know, in this case, the 12 period exponential moving average. Ah, and then just comparing it to a slightly longer trend. Ah, and so that tells you whether momentum is stronger week. In other words, if you compare kind of like the strength of the stock price move and the pace of up stock price move over a short period and compare it to ah, slightly longer period you can kind of see is is the price moving at an accelerating or decelerating pace compared to what it had been trending it before? Right. So again, it's a it's telling you whether kind of the near term momentum is stronger or weaker, whether it's accelerating or decelerating. Yeah, another thing to keep in mind when watching the Mac D and and analyzing it, it's just understand whether it's positive or negative and what that means. So the Mackie line will be positive when the 12 day moving average is above the 26 day moving average, right? So in other words, when the short term trend is above the longer term trend, it's going to be the Mac D line will be positive, and that's positive. It basically implies that the stocks were in an uptrend and vice versa. So when the magnets negative, it means the stocks in a downtrend because the 12 day moving averages below the 26 day moving average and so what you want to do is not just look for whether or not the line the Mac Dylan is below the signal line, but also whether overall that trend is up or down, whether overall, that trend is negative and you'll see whether that overall trend is negative, whether the Machias positive or negative, simply by watching kind of zero life. So when the the Mac D is below Ah, this zero line that basically means you're kind of in this bearish configuration. In other words, the near term trend has is down, regardless of whether you're giving signals of whether or not their short term momentum or not. So you you know, this is a quick way to summarize kind of the Mac D at a glance right, you can, you know the strongest formation is is kind of denoted in these green signals, where everything is trending up your positive and your above the signal line. It's basically the basic idea is in this formation. Uh, the stock is going up at an accelerating pace. Ah, whereas in this weakening period it's more like to stock. It's still trending up, but it's at a decelerating pace or weakening pace. And alternatively, when the stocks kind of in this period right here. You've got, ah, stock price going down at an accelerating pace. Ah, and so you This is the kind of the formations you wanna watch for When? When analyzing this Mac de 4. Basics of Reading the MACD​: So now that you understand kind of what the Mackie measures and how it's a mo mentum indicator, you can kind of see how we would use it. Basically, when you're using a Mac D, you're looking for crossovers, whether it's positive or negative and then looking for divergences. So what kind of walk you through it? The first thing you want to look for is crossovers. That's the signal a lot of people use. So when the Mac D crosses above or below the seat, align Ah, lot of people use that it signals. So generally you want to look to buy when the Mackie crosses above its signal line and look to sell when the Mac D crosses below it. Seen a line? Ah, no Notice how I say, look to buy and look to sell. Some people use that as clear trading signals. I think they're not so reliable when used on their own. You can see when oftentimes the Mackie will cross above or below its signal line and give these false signals so you don't want to be strict about it. But you just want to use that as a guide and kind of one indicator of whether Mo mentum is turning up or turning down. One way to make crossovers a little more reliable and a little more tradable is to watch the weeklies again. It's something I've talked about before when looking at just normal trend lines and support weeklies often give better signals for longer term traders. Ah, in this case, you can see as compared to the chart before Ah, there's just less kind of head fix, right? That the trends are longer. When these Mackey's make these crossovers. Ah, you get multi week trades, um, out of it. And so, ah, typically looking at weekly timeframes just produce better and longer term more tradable signals. Ah, but you know, again, when you're reading the Mac, do you want to use the in conjunction? Not just looking at just simple crossovers. Ah, in this case, combining if you remember my Macchia to glance. Combining both the Mac D crossovers as well as being positive negative, provides just a better bullish signal and a better indication of a bullish configuration. In this case, When the Mackie was strongly above the zero line and positive Aziz well as above the signal line, it gave you a real indicator that the true strength of the trend was strong. Ah, and this is where you know, if you kind of, like, highlight the points where, ah, that configuration is a parent, you can see how it just produces. Like nice, strong trends. You on the flip side, you can see Ah, when the opposite happens. When you're below the zero line and below the signal line, you're just in a bearish configuration. So you can use that as a sign to kind of step away from the stock or not be in a rush to buy. You can see where it's bearish. And then again, look for the crossovers. Ah, to kind of like to get to give you a heads up ast to whether the indicator Ah, the Mac D is about to turn up, But again, not really get fully bullish until everything's lining up. You know where you're both above the zero line Ah, and positive. And also, uh, you giving kind of crossover signals as well. But you can see how when you're in this bearish configuration as we're down here in this kind of negative range for this multi month period. This stock was just a dangerous stock to own. So just watching. Ah, whether or not the Mac D is giving you the this configuration can keep you out of some potentially dangerous situations or keep you from buying too early. Another tip when you're watching these Mackey lines is to watch the Mackie hissed a grams. The instagrams are basically these bars. The spark chart Ah, that that often accompanies the Mac d Ah, and it's basically an indicator of the indicator lowers the mac needs an indicator, and the Mackie hissed. A grams kind of give you insight into how that Magdy Line is acting. Ah, and you can kind of see visually what's happening, right? It measures. Ah, you know, kind of the mo mentum of that signal lights. So as these bars kind of ramp up and then peak, it kind of gives you a heads up as to whether or not that Mac D line is also gonna lose momentum and eventually kind of turn as well 5. The Secrets of MACD Divergences: The other thing you want to watch for when you're watching the Mac D is not just the signals but also divergences. Ah, and it is a big one. This is something I use often, and it sets up a lot of my favorite trades. And the basic idea is to watch for when the Mac D makes highs or lows that diverge from corresponding highs and lows in the stock price. Right? So remember the story, right? What would you expect when the stock price is making a new high? If momentum is strong and buying pressure is strong, you would expect the Mac Neto also be making new highs and toe have strong momentum behind it. For if its stock is making new lows, you would expect, Ah, the Mac D because it's a momentum indicator, an indicator of buying and selling pressure toe also be making new lows. So when you see something diverging from it, ah, from what you would expect Ah, you want to take notice of it? And normally it's a sign that something is about to change. So he, uh So if you look at these two charts, here's an example of a bullish divergence. Right. Um, I'm gonna just watch my cursor here, right? You can see the stock price up here making new lows. Right. But you'll notice that the Mac D this ah, Mac D line and a single line are both making higher lows. Right? So even though the stock price is hitting new lows, it's doing so with less mo mentum less overall force. Right? If you look at kind of the big picture Ah, you see this over here on this chart as well? Uh, stock price down here is making a new low. But this Mac D line, uh, is making a higher low corresponding to this life. So this low right here. Ah, I had a Mac d level down here and this low down here, even though it's a lower level on the stock price is actually making a stronger or higher low on the Mac D. And so those kind of diversions is what you want to look for over a long time frame. Ah, if you're pulling up a stock and looking to buy right because, um, you're basically saying that the stock price is making new lows, but doing so with less selling pressure. In other words, the bears. The sellers just have less power behind it on this most recent low. And normally that means they're close to exhausting themselves. Yeah, works the other way as well. Obviously you can see there's bearish. You can look for bearish divergences when the stock is making a high. Ah, you know, in this case, you can see up here. Ah, the stock price was was testing its highs up here, but the Mac D was significantly lower, right? And so that divergence signaled. Ah, the, you know, a potential, like just exhaustion of buying power. And so when eventually broke this trend and broke this trend up, there was just there was this his vacuum of sellers that caused this this kind of extended selloff. So, you know, one thing to watch for as as kind of if you're being anticipatory and you're looking to and you have a stock price that's testing its highs, you want to see whether the technical indicators in case this case, the Mac D is also confirming it. And when it doesn't confirm it, you know, it puts you on watch 6. Why I Don't Use the RSI (and Others)​: There's obviously a lot of different technical indicators. I talked about the Mac d Ah, but there's a Zinkhan. See, if you experiment and kind of go into your stock charting service. Ah, there's dozens and dozens and you'll see on you know, whether your Twitter or blog's there's people using all sorts of Ah, the reality is, as you know, my philosophy is you don't really need to know them all. I just use pretty much the Mac D and a couple others. Ah, but I'm gonna touch upon conceptually what some of these others are. Um, you know, one of more common ones is the are size, the relative strength index. You'll see it all the time, and again, I will note that I don't really use it. Ah, but it's pretty common. Ah, and it's an example of a mo mentum indicator that indicate that measures over ball and oversold levels. So there's a calculation behind it. I won't really get into it. You can look into it if you want. Ah, but it basically compares bullish and price and bearish price momentum and plots it on a graph. So it looks a little different than the Mac D where the idea is. Ah, it's more an overbought and oversold level indicator. So the way you would read something like this is if it gets into this range, you'll say that stock is overbought. If it gets down here, it's oversold. And some people you will use that as by sea cell signals. And like I said, I don't really use it. And the reason I'll use it is to me, it's just Ah, you know, it's not that reliable and an indicator. I can see how you could use it in conjunction with some of the other signals, and it could be used. But on its own, you can see here it's overbought and stocks stay overbought. Similarly, stocks can a stay oversold for a while. Ah, and there's just too much of a big range in the middle that for me to use it as a reliable trading indicator. Ah, and but the reason I bring it up is because it gives you a sense for the different types of indicators that are out there. Ah, and there's more. There's. Here's another common one. Ah, the Bollinger Band again. It gives you kind of like an upper range that is measured by some calculation. Ah, but again, like the RS I to me, there's so many false signals where it touches this top band but doesn't really do anything and actually rise along this top band. So I'm not really sure how to use it. Ah, there's even more complicated ones. The one yield that I'm familiar with, it's called the D Mark indicator. And it's this really complicated calculation and counting system where, ah, you know, it kind of gives you these numbers. And when it hit certain numbers those air buy or sell signals, I found that actually be useful. Sometimes I'll use it. You do have to pay for it. Ah, but again, the idea that I'm telling you these is just to give you idea for the big variety of types of indicators that are out there. But I do go back to my summary of technical indicators, which is Ah, lot of it just comes down to personal preference. So a two beginning stages, I always recommend you just starting with the basic ones. In this case, obviously I teach the Mac D ah, but feel free to experiment. Ah, and add to your process as you go along. Ah, and and as you kind of get familiar with different ones, if you find them useful and find them just like, um, kind of intuitive to you, feel free to use them. Ah, but I will say Don't go overboard. That's a mistake a lot of people make because there so many indicators out there and a lot of them are really useful and really interesting. Eso people will add a bunch to them, but more is not better, you know, it s so are more often than not, you want to simplify things. Ah, and you want to use, you know, just a couple to just add to your process. 7. My Personal Favorite: Directional Move Index​: as I mentioned, I use ah couple other mo mentum indicators and technicals to to add confirmation to my stacking. Ah, my stacking process. Ah, you know, in addition, the Mac D, which is the one I mainly use. I also look at the directional move index. It's called the d M I. It's one of the less followed indicators. I personally like it just cause it's visually appealing to me, to be honest. Ah, and it gives insight into both positive and negative mo mentum. Ah, so years kind of like Ah, basically what the d m I will look like where it gives you a green line Ah, to kind of indicate the positive action and a red line to indicate read or to indicate negative action. And like the Mac D, it's basically a momentum indicator, but in this case it gives you both positive and negative momento. Ah, and when the green line, the signal or the way to use it is when the green and red lines cross, it gives you an indicator whether selling momentum is stronger than buying momentum or vice versa. Eso In this case, you can see when the red line crossed over the Green Line. It indicated a downtrend, and then you can kind of confirm it. You see how it confirmed with the stock price? And similarly, when ah, buying momentum overtook selling momentum. That was an indicator that the stock price was was going to trend up. Eso I like that again it gets gives me It's very similar to the Mac d Ah, but it just gives you a little more insight and just an added signal that I can use when I'm trading. And similarly, Mac D, I traded the kind of the same way. I use it the same way for, you know, not only looking for cross is ah, but also looking for divergences rights. So you can see here as this stock price was making new lows, this Ah, the selling Mo mentum are there's this Red line was actually starting to trend down already . So that was a divergence. That kind of give you a hint that possibly, as you know, at these new lows, uh, they weren't gonna hold, or eventually the pattern was gonna reverse. Similarly, Mac D, where the divergence is kind of indicate whether or not one side buyers or sellers have kind of our close to exhausting themselves, and there could be a trend reversal 8. Technical Indicators In Action: So let's go quickly and look at a bunch of different technical indicator formations you might see. Ah, bullish and bearish. Ah, First off will look at this chart of Microsoft, which is obviously a classically bullish Ah, formation. Um, so obviously the stock price is going up, but it's all being confirmed by the technical and momentum indicators as well. Ah, you can see if you just look at the Mac D down here. Ah, zoom in on it. Um, you know, it's everything we want, right? So any obviously, any time we're above the zero line. In other words, the Mac Dia's above in the green. Ah, it's bullish in general. So it's the stock is the uptrend or the trend is up and you'll even see when the Mac D line breaks below the signal line, which is kind of like a sign of, ah, you know, decelerating pace or consolidation. It doesn't stay there very long and states positive, right? So ah, you know, if you are in a classically bullish formation with, you know negative diversions, you can see every high it's making. Mo mentum is also making a new high. This Mac D line Ah, you know, you don't necessarily want to sell. Every time you break below this signal line, a lot of people will get nervous and try to trade this signal line. Ah, but generally speaking, if it's in an uptrend and we're above the zero line, you want to kind of, like, ride it out on, you'll see in this case every time it did break below the signal line, you know, it caused, you know, a few days of pullback or consolidation in this case, it pulled bag. In this case, it just kind of went sideways and kind of worked off that overbought condition. And then again what? It Ah, because it was just a bullish formation. It went, re accelerated. It caught momentum back up again. So again, Ah, and you can start to see that with the d. M. I as well, where it just stayed in the green. Ah, and just kind of re accelerated. Here's what I would consider a bullish set up for technical indicators on a stock. That's kind of that it's low. So again, the stock prices making lows. Ah, and obviously people who aren't watching the technicals and momentum might get nervous at these lows, but ah, well, you can see that every time and make it still makes a low. Ah, it's doing so with positive divergence on this, Mac. D um you know, in other words, it's making kind of higher lows on this Mac D The line is trending up. Signal line is trending up in, you know, when we're not fully bullish, but we're kind of moving our way up there. Ah, as it's kind of making this low. Ah, and so you know, when it finally does break above into the positive and above the signal line, we have a nice kind of potential by, um, confirming with with mo mentum. Ah, you know, kind of near its low. So these air coming to kind of set ups, I like where you're buying near a low. Ah, but you're kind of like have, you know, kind of insight from the technical indicators telling you that that it's an interesting by down here. Now here's a more bearish formation again, a stock price which generally looks strong toe, you know, kind of like to most people, stock is making highs. It's trending up. Everything is trending up. Ah, but you know, we can see that as the stock has been making highs the Mac D and the D M. I have both been showing negative divergence, right? Hot or lower highs at every price high. Ah, And now you can see the d m. I about to kind of cross over into the red. And you see the mac D crossing below its signal line. Ah, so again, this is kind of like, if you are already looking at some sort of chart pattern or downtrend break as a catalyst in chart pattern Ah, you be able to confirm at least weakness in some of the technical indicators to kind of like add conviction to, ah, potential cell. And then now here we have a classically bearish formation. Um, obviously, the stock is going down, but we're not really seeing any positive divergence on the technicals. That would indicate that the stock is, you know, into an interesting kind of contrary and buy low candidate. Right? You've got this technical indicators of mo mentum basically just kind of staying in this negative territory the whole time. Ah, and it does kind of peak above Ah, in about the single line, but we're kind of staying down into in this kind of downtrend. Ah, and obviously when it ah, you know, when it breaks below the signal line and is negative, that's kind of the classic bearish confirmation from technicals. You also have the barest confirmation from the d. M I. And so those are kind of like when you see these levels on when you kind of see these technical indicators in this configuration, eyes just generally better toe. Wait until you have at least have something going for you. 9. The 3 Cs Stacking System: Trading Walkthrough: So now let's put everything together and walk through, analyzing a stock chart and analyzing a potential trade. Ah, first, we always want to start off with some fundamental reason. Whether it's you like the company, the industry or the story. For some reason, that's always a good starting point. Ah, once you have that, then you can walk through my stacking system and look for the three C's. But through it all, what you always want to do is be patient. Don't force trades, be methodical on walk through everything to make sure everything is there and that you understand betrayed, that you're looking for. By now, you should have a pretty good sense of how the process is gonna work. We're going to go through my stacking system looking for a catalyst chart and confirmation the three C's so we'll start with the first part. The catalyst. Ah, the most important part for buys. We're gonna look for downtrend line breaks if the stock's been in a downtrend, has it breaking above that resistance? We're also look for some levels of horizontal resistance or moving average resistance that it's breaking through Ah, alternately. Sometimes we'll look for ah if a stock that's been in an uptrend has it pulled back and is now at some sort of support level, that it should hold and would be a good bye spot a same time on the other end for cells were, look for the opposite right. We're gonna look for uptrend line break for breaking blossoms or horizontal support or moving average support levels that it should hold that it's not holding. Um, and just like with breaking above support. Sometimes when a stock will hit a resistance level, that might be an interesting point. Toe potentially look for a cell. And ideally, when we're looking for Catalyst, we want to stack multiple catalysts. In other words, we want to see multiple trendline breaks or multiple tests of some sort of support or resistance level, all kind of agreeing with each other. So let's walk through an example Here I put up a chart here of salesforce dot com. Let's say we pulled up this chart and we're deciding whether there's a trade here, whether there's a buy or a sell. At first glance, the first thing we want to see is it's obviously in an uptrend kind of over this time period. All the moving averages are trending in the right direction in a bullish configuration, with the short terms above the longer terms. Ah, and it's generally a bullish pattern. But at the same time it's been in a downtrend, at least for ah, a short time period. So the first thing we want to do is identify all the levels of support, resistance and trends weaken, see Ah, and certainly the most obvious ones again sticking with the idea of just trying to find major highs and lows we can see Ah, major high up here in a major Ah, significant turning point right here. So we do a trend line that would kind of signify this more immediate downtrend line Within this larger uptrend, we could also draw some horizontal resistance again. Trying to pick a line that touches multiple points on this horizontal resistance seemed to be an important level, right? Provided, ah, near term top. Ah, this week a swell as kind of a significant turning point right here. So if we do our trend lines in this way with the horizontal resistance and this, uh, this down trendline resistance Ah, we have a couple levels to work with to see if there's a potential trade if it breaks above there. And in this case, we do have that catalyst. We have a break of a downtrend line as well as a break above resistance, all kind of setting up a nice trigger for a potential trade. So they will move to the next step in my stacking system, which is looking for a chart pattern that might confirm the catalyst we've we've already established. Ah, in this case, we would look be looking for time, typical bullish by chart patterns, bull flags and triangle breakouts, inverse head and shoulders and coupled handles or double bottoms. You know, if we were looking for Ah, we are cows with a cell, we might be focused on the cell truck patterns, bear flags and breakdowns, head and shoulders tops as well as double tops. Whatever the case, what we're trying to do is kind of match up the cattle's. We're seeing with some sort of pattern that if it plays out, what kind of add to our conviction in our trade? So going back to this chart of Salesforce Ah, we can see we you know, in this pattern right here, we can see a clear double bottom. So, you know, we have these trendline breaks. We have the cows on top of it. We have a nice double bottom pattern that's that's been played out by a stab by breaking this neckline. Ah. Which would be kind of like the confirmation of that pattern. Eso We've checked two of the boxes already. We've got the catalyst, and we've got a chart pattern backing it up. Ideally, we might want mawr chart patterns. Ah, and sometimes you'll see that Ah, you know, with whether it's a flag or a triangle breakout. Uh, but in this case, we at least have, ah, a double bottom pattern and finally will go to the confirmation. The confirmation for me is always looking for the technical indicators. Ah, you know, as as I've said before, you can use whatever technical indicators you want. I use a Mac D. So I would be looking for a bullish Mac D configuration. As we've talked about Ah green d m I. The demise of another technical indicator I use, um, and I'd look for a positive divergence setting up into Theis into that trade. Ah, you know, And that's something you have to kind of look to see in the past or is kind of the previous , you know, the trailing period. Whether you you also have positive divergence setting that up. Ah, and again with, ah, with the cell signals, you look for the opposite bears configurations, red demise and negative diversions. So jumping back to this chart we've already established the 1st 2 stacks is that are the technicals confirming All right, In this case, it is with the Mac D You're looking for a crossovers and positive divergence on. You have both of them. You have the maxi single about, or the Mac D line above the single line. You've actually have it crossing into the zero r crossing into the positive territory. So you have pretty much the beginnings of the bullish confirmation, right? Ah, and similarly, we had that set up going in right? You had on this, uh, this bottom. You had positive divergence, right? A higher low on this Mac D line. So the mackie is confirming you have the d. M. I also confirming with a green about to turn over to the red you know hasn't officially confirmed yet, but it's certainly trending that way. And a lot of times that's enough to give you that confirmation. And that's pretty much what it would look like. Just a few lines we would draw. Ah, a couple pictures. We would look at a couple indicators we would watch on. We'd go step by step through them through some simple, basic tools on, we'd have a potential by right here. 10. Bonus: The Next Step in the Stacking System: So that's it for this class on technical indicators, the final see in my three C stacking system. How to use these crazy charts and graphs to confirm what we're seeing in a stock price action. Look for the next class, which is the final one, putting it all together with live video walk throughs of the full three C stacking system in action, walking through multiple stock charts and multiple scenarios, It's gonna be a really good one again. We're going to go through the three C's process in a full in that next class. We're going to start with catalysts, trendline support and resistance breaks. We're gonna identify chart patterns, live in action where it's a little hard to identify them sometimes. And, of course, we're gonna try to use confirmation from these technicals that we've learned here to really kind of put it all together and confirm and sometimes even predict stock price actions. So look for that next fast. It's called putting It All Together, the three C's stacking system and inaction on. We're gonna go through all of it. In the meantime, take a second to leave a review. I welcome any feedback also feel free to go to market mind trading dot com and join my free email nous for free charts, insights, trading tips and discounts on my future products. Also, follow me on Twitter for daily tips, charts and real time trades and market insights on Twitter I'm at market mind three dot com . Talk to you soon.