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How to Trade a Double Top and Double Bottom Correctly - YouTube
Channel: The Moving Average
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So if you've been day trading for any amount of time, you've
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definitely heard the phrase double bottom and double top.
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When there is an area of support and the price has bounced off of it,
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it tends to come down and test it again and bounce off of it.
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Same with the level of resistance the price will touch it and then
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come back up to retest it.
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The issue with double tops and double bottoms is you don't know if
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it's going to be a triple top or not show in this video, I'm going to
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show you exactly how to trade a double top and know that it is
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actually going to reject off of that second retest.
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Welcome back to the channel, everybody.
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My name is already and this is the moving averages, shall we discuss
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everything day trading to keep you profitable on a consistent basis.
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This strategy is ridiculously simple so it does not require an 18
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minute video.
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So this is going to be explained to you in the next 5 minutes.
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I've got two coffees cuz I've had 3 hours of sleep.
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So let's get into the charts.
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All right, we are looking at us-30 on a 15-minute time frame.
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You do not want to do this on a lower time frame like the one minute
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or the 5 minute because you want to look at key levels of support and
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resistance and on those lower time frames, those are not he levels of
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support and resistance.
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They are kind of just he's really weak levels, the higher the time
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frame, the more significant the level.
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So when looking at support and resistance levels, basically, you're
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just drawing a horizontal line across multiple intersecting points.
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You're only taking into account, the big rejection
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Areas where the price saw a lot of resistance or a lot of support and
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bounce off of that.
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And it's that simple looking back here from today back to April 16th
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on us-30, I've got three lines and that's it.
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Now what you're going to want to do is add some indicators to your
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chart to give you a visual representation of what's actually going on
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with the momentum, this is strictly momentum trading.
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The first indicator that you're going to want to have up on the screen
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is the RSI typing RSI to the indicators tab.
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It is the relative strength index post are next to.
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It should be one of your favorites.
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It looks like this or his mind as if you'd like yours to look like
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this ad the RSI and click on the little settings, wheel change the
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artist's eye color to yellow in accordance with the color theme of the
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channel, change the upper band and the lower band 250 and leave it as
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a solid line and leave the standard input as 14.
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I like to have three moving averages up there, smooth, moving,
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averages the 21, 250 and the 200 just so I can get
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Their idea of what the prices doing it for trending up or trending
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down.
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So now that we've got that set up, we look at our levels, we see these
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key levels of support and key levels of resistance.
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So we saw the price come down here to $33,762 reject off of it.
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And then came back down to test again, and how do you know if the
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price is actually going to stop here or continue down?
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You wait for rejection off of that level.
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And then, once that rejection has happened with this big, huge green
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candle.
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You look at the RSI you clearly see here, we had a level and a level.
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This is completely flat and parallel.
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However, looking at the RSI we saw a low Point here and a higher low
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here, creating a Divergent, meaning that instead of them being on the
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same level, one is higher or lower.
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It's easy to tell you take your little trendline tool and you see that
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that is not level yet.
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These two are
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Level meaning that the momentum has diminished and we should see a
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pump to the upside.
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So once you saw this rejection candle, you're comfortable taking a
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long position.
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How do we do that, wherever you enter in on this candle, you set your
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entry price and a stop loss below the bottom of the WIC and you're
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looking for about a 1/2 to risk reward ratio.
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That's it right here.
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You got 200 points off of this one rejection, one more example and
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that's it like we have a level here.
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We're waiting for the price to come back up and test this Zone.
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It did it again, we got a rejection, we see it perfectly horizontal,
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it's on the same exact level so we take a look at our RSI and we see
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this high and this one's actually lower drawing a trend line across
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that.
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You can see it is not horizontal meaning that that should go on the
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downside.
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You place, your short position with a stop loss above the Wicks and
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you're looking for a 1 to 2 and again you got like another hundred
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forty points off of this one move and again, it only works on higher
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time frame.
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These are long-term tree
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The reason is on higher time frames.
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You have a clear indication of actual support and resistance levels.
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So if you guys are still watching this video, that means that you like
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the video to be like the video, just smashed the big thumbs up button
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right down there, but essentially, if you guys are getting onto your
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charts and marking up support and resistance levels do this and then
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keep an eye out for injections off of those levels than take a glance
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at your RSI and know that you can get in on your long or short
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position.
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Now, the long-term trading isn't your style and you want a good
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scalping video.
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Check out this video on scalping right here.
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And if you guys enjoy the way I teach, and you want to see more videos
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like this, consider subscribing to the channel, by clicking this
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button right here.
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Hope I was able to help you guys out.
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Thank you so much for watching and we will see you in the next video.
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