Finding Bottoms Using Monthly Inside Candles: SNOW

16 ביולי 2023

This past year, I shared many bottoms on names on my weekly WLs based on bottoming consolidation structures, mentioning a specific strategy as a reasoning for the trades. Aside from understanding price action, I used a simple method:

Monthly inside candles/bars.

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What is an inside candle/bar?

Inside candles trade “inside” its previous candle. The previous candle’s high and low can be used as resistance and support, respectively. Your trade execution comes on a break & hold above/below the range.

Here are a few examples of this:

https://pbs.twimg.com/media/F1FLZCxWIAAXD9g?format=png&name=medium

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SNOW

This has traded within it’s May ‘22 inside range for over a year. This has been one of my top watches earlier this year.

The range provides a macro resistance/support of $187.23 and $112.10, respectively. These levels can now be used as targets for your trades.

How do I execute on this?

Zoom into LTFs to find swing opportunities. In my 1/23/23 weekly watchlist, I provided SNOW based on a previous bull div + key support/demand being held (red box).

https://pbs.twimg.com/media/F1FMEMsWYAI02aR?format=jpg&name=4096x4096

All swing contracts provided on the WL printed, while SNOW saw a massive upside move from $140 into $178.70 within 2 weeks.

You’ll also notice my invalidation for this was $133.10 while the low was $134.34. This invalidation was based on a breakdown of the range low.

Now once again, on 3/31/2023 I mentioned SNOW as a potential high R:R trade.

Based on the exact same reasoning as my January WL.

Once again, SNOW was able to hold its demand zone with a macro target of the monthly inside candle resistance.

SNOW

The same exact entry & same exact analysis now provided a recent move into my $187.23 target. First move providing a 33% move, second providing a 42% move.

This is how you take advantage of macro inside ranges (specifically monthly candles in these examples).

https://pbs.twimg.com/media/F1FMZ9HXwAUp3rd?format=jpg&name=4096x4096