‘Pattern Within Pattern’ Points Trader To Setups


Simpler Trading Team

3 min read

Recession fears are dominating the media headlines and the stock market is taking a hit as market participants continue selling.

The fear was palpable among traders as the Volatility Index (VIX) spiked as high as 8.48%. Today marked the fourth day in a row of strong selling as all three major indexes dropped sharply, including the Dow down by 500 points at one point.

Simpler’s traders are revealing ways to trade in this market uncertainty.

Options with John Carter
Futures with Raghee Horner

‘Pattern within a pattern’ helps trader find setups

Finding the “pattern within the pattern” is one strategy for this Simpler Trading team member.

Kody Ashmore, Director of Weekly Options Strategies at Simpler Trading, is constantly identifying patterns that can support his goal of producing weekly income. Short-term trading always holds his attention.

Kody follows larger stock chart patterns – weekly and monthly – that align with a daily pattern. This is the “pattern within a pattern.”

“It highlights the potential that a monthly/weekly bull flag pattern may break out if the daily rising wedge does break down and find support,” Kody explained. “Then it will form a cup and handle breakout to the upside.”

Kody, who likes to avoid daily stock market drama, explains this zero days to expiration (0DTE) options pattern in more detail in this video.

He explained how an upside breakout takes time as the pattern forms.

“The overall market has been in this huge channel down,” Kody said. He doesn’t expect the market to break strongly higher anytime soon.

In the market today, the Dow closed at 33,596.34 points to shed 1.03% (sinking by 350.76 points on the day). The Nasdaq dropped to 11,014.89 points for a 2% tumble while the S&P 500 brought up the rear, down 1.44% to 3,941.26 points.

The VIX, or “fear index,” spiked as high as 22.55 today. Anything above 20 is considered a volatile market. It leveled off to just under 7% higher at the stock market closing bell.

For the cup and handle pattern to form, the market must move lower to the 50-day simple moving average for support before price will bounce back.

Time to ditch swing trades for day trading?

This stock market continues to be volatile, and Kody knows that anything can happen to break this pattern setup. Then it’s back to the drawing board and adapt to what the market delivers.

An uncertain market has Kody, like many experienced traders, rethinking how much extended exposure they want in these market conditions.

“My swing trading days may be over,” Kody said. “I’ve been finding so much peace of mind coming in, trading, and going on to living life and starting fresh at the end of the day not worrying about what is happening in the market overnight.”

For more on Kody’s trading methods and strategies, follow him here.

Is day trading an option for you?

All the chaos of this market has created a new level of stress for traders.

One strategy to consider is day trading. While day trading is considered a higher level of risk, the team at Simpler Trading understands what traders go through when the market maintains an extended level of uncertainty.

Simpler Day Trading allows members to follow experienced traders as they “get in, get out” whttps://www.simplertrading.com/trade-alerts/small-accountith trades that limit capital exposure. What is appealing to traders in this market is the community of professional traders delivering live-trading insights during market sessions.

Avoid the stagnation of trading alone, and check out this daily training and learning option.