How We Use The Concept of Technical Damage

Welcome back everyone!  Before we get into tonight’s videos, I want to thank you again.  You can see how charitable you guys have been by going to www.becomeabettertrader.com/stjude.  I have proof that I have the world’s greatest students.  Between this current event, and the previous event, we have raised over 40,000 dollars.  You guys are just phenomenal!  Keep on giving to this worthy cause.

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This is another one of the merged day trade and swing trade videos, and what I want to do is show exactly how my techniques work whether you’re a day trader or a swing trader and why regardless of who you are, you better be paying attention to these award-winning strategies.

Let’s talk about what we’re referring to when we talk about technical damage and how and why we use it. Technical damage is the concept where I have my channel, and what I’m typically looking for is continuation trades off the channel. We’re going to talk about that in another video. The warning sign when technical damage comes into play is, we actually go from the bottom of the channel to touch the top side of the channel. It doesn’t have to happen in one bar — it can happen in two or three bars. Once you see technical damage, it means one of two things often: It often means that either the market is going to consolidate for a while and whip back and forth or it means that the market can actually be reversing. If you’ve been using the channel to trade, it can be very hazardous to your financial health.

This section I highlighted for you is an example of where it goes sideways for quite a while. Here is an example of how it can actually reverse the trend. The market has been going down respecting my channel. But now we get back above and the channel becomes support and starts to take off again. Now the channel becomes long side support. Technical damage is basically a graphical representation telling me that the trend that I’ve had in place that I’m counting on to take trades off of is no longer there and the dynamics may have changed to a sideways market or worse yet, a completely opposite direction market of where I’m looking to trade. The things that I’m looking for here are this area if we’re in a downtrend or vice versa.

Let’s look at another example or two of this. This market was in a downtrend and comes back through here and now this is becoming support. Same thing right over here. We were in a down trend back over here and then it breaks through from the bottom side to the top side. Now we run the risk of it becoming support.

Here is another example on a daily basis. It doesn’t matter whether it’s a daily or a weekly. It’s the same concept. Here is where the channel was support until here it came to the top side to the bottom side. Now we have to worry that we can have a consolidation or worse yet, a trend change, which is what happened here. For a month and a half it was in a down trend using my channel as resistance. Then it came from below from the downside up to the upside and the channel became support again.

It all starts with technical damage. When we’re analyzing our trend, we’re looking to see if we touch the bottom side to the top or touch the top to the bottom. That’s when we back off and understand the market may start to go sideways after that or worse yet, go the complete opposite direction as you can see with my day trading and end of day examples. The concept is identical and yet very powerful.

Thanks for listening. Once again, I’m showing you how these day trade and swing trade concepts all work hand-in-hand. So if you’re a great day trader, you can be a great swing trader and vice versa.

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More Key Tools To Identify Probable Reversals

Welcome back everyone!  Before we get into tonight’s videos, I want to thank you again.  You can see how charitable...

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