How To Trade The Golden Triangle: $QQQ
No, not the Bermuda Triangle
Relax, we're not trading poppy plant as we're law abiding and responsible citizens here ☺️
There are also 3 types of triangle patterns in the market namely, the symmetrical, the ascending and the descending triangles found among the sea of chart patterns.
The Three Triangles
Triangle patterns have three main variations and appear frequently in the financial market. These patterns provide traders with greater insight into future price movement and the possible resumption of the current trend. However, not all triangle formations can be interpreted in the same way, which is why it is essential to understand each triangle pattern individually.
What Is A Triangle Pattern?
A triangle pattern is a consolidation pattern that occurs mid-trend and usually signals a continuation of the existing trend. The triangle chart pattern is formed by drawing two converging trendlines as price temporarily moves in a sideways direction. Traders often look for a subsequent breakout, in the direction of the preceding trend, as a signal to enter a trade.
The Symmetrical Triangle
Symmetrical Triangle
The symmetrical triangle can be viewed as the starting point for all variations of the triangle pattern. As the name suggests, a triangle can be seen after drawing two converging trendlines on a chart.
The difference between the symmetrical and the other triangle patterns is that the symmetrical triangle is a neutral pattern and does not lean in any direction. While the triangle itself is neutral, it still favors the direction of the existing trend and traders look for breakouts in the direction of the trend.
Symmetrical Triangle Trading Strategy
Triangles provide an effective measuring technique for trading the breakout, and this technique can be adapted and applied to the other variations as well.
The chart below shows the symmetrical triangle. The vertical distance between the upper and lower trendline can be measured and used to forecast the appropriate target once price has broken out of the symmetrical triangle.
Entry, profit target & stop loss
Its important to note that finding the perfect symmetrical triangle is extremely rare and that traders should not be too hasty to invalidate imperfect patterns. Traders ought to understand that triangle analysis is less about finding the perfect pattern and more about understanding what the market is communicating, through price action.
Fake out, breakout & retest
Why Trade Invesco QQQ?
Lately the financial sectors are performing badly. Money are transferred into other sectors pumping up volume to move charts this week. QQQ could lead the charge as an exchange-traded fund that tracks the Nasdaq-100 Index™ and features Apple, Google, Microsoft, and more. A tech heavy ETF with more than 50% holding.
Since its formation in 1999, Invesco QQQ has demonstrated a history of outperformance, typically beating the S&P 500 Index. It's the 2nd-most traded ETF in the US, based on average daily volume traded, as of Dec 31, 2022.
No financial sector in QQQ 😅
The bull flag pattern found in the daily chart showsQQQ is in a strong uptrend in Q1. It is called a flag pattern because when you see it on a chart it looks like a flag on a pole and since we are in an uptrend it is considered a bullish flag.
The pole is the result of a vertical rise since January and the flag results from a period of consolidation over the last month in February.
Still in time to join the party upon confirmation
⚠️ Trading Tips: Since hot money are flowing back into tech sector after the financial turmoil from bank stocks, choosing QQQ over S&P could be a better bet for now. Looking at calls above 300.98 and puts under 298.44. Double top at 304 and retest level at 296. Get ready to pump up the volume 😉
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Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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