When I do chart analysis I like to keep things simple. What do I mean? I find myself relying on patterns when I can “connect the dots” on trend-lines as much as possible. I have found that one of the biggest mistakes a new trader makes is drawing too many trend-lines, and not finding enough “points of reference.” The more times a trend-line can be touched, the more significant. This comes into play in many of the patterns I have discussed in my paid classes, and on the free live classes on http://www.simplerstocks.com

I have mentioned ledge trades before in this blog, but I love to use this practice for bull and bear flags. Here is a great bull flag in Regeneron (REGN).

connecting-the-dots1

Note how many times a trend-line touches the tops of the previous move.

Here is another one. Remember the more times the trend-line is touched, the more significant.

connecting-the-dots2

Remember the key is to buy, or short on the breakout. Don’t anticipate!


Get more of Chris Brecher's set-ups, market commentary, and daily analysis at Simpler Stocks.