2. Opening Range Breakout

Definition:

• The opening range is the high and low price of a stock during the first 30 minutes to an hour of trading.

• Visualization: Imagine the stock market opens, and within the first hour, a stock trades between $50 and $55. This range is the opening range.

• Usage: Traders look for the stock to break above $55 (breakout) or below $50 (breakdown) and enter trades in the direction of the breakout.

• Stop Loss: Place the stop loss just above the upper boundary of the opening range. For example, if the opening range is $50 to $55 and the price breaks below $50, place the stop loss at $55.50 or $56.

3. Break/Retest

Definition:

• After a price breaks through a support or resistance level, it often returns to that level to test it before continuing in the breakout direction.

• Visualization: Imagine a stock breaking above a resistance level of $100, then falling back to $100 before rising again.

• Usage: Traders enter trades on the retest of the broken level, expecting the price to continue in the breakout direction.

• Stop Loss: Place the stop loss just below the retested resistance level for going long. Place the stop loss just above the retested support level when shorting.

Playbook

Here are a few strategies that you could implement right away. I know that there are many other patterns or plays such as Head and Shoulders, Cup and Handle, etc.

Understanding at least the first five will give you an upper hand in understanding the market's price action, which will further accelerate your trading journey.

Once you understand that, you can experiment while having an arsenal of simple plays that you can keep repeating and scale up.

7. Flag/Pennants

Flag:

• Definition: A continuation pattern that forms after a strong price movement, followed by a consolidation period that forms a rectangular shape.

• Visualization: Imagine a stock price rising sharply, then moving sideways in a narrow range, forming a flag shape.

• Usage: Traders enter trades in the direction of the initial movement after the price breaks out of the flag.

• Stop Loss: Place the stop loss just below the lower boundary of the flag for a bullish flag, or just above the upper boundary for a bearish flag. For example, if the flag's lower boundary is at $50, place the stop loss at $49.50 or $49.

Pennant:

• Definition: Similar to a flag but the consolidation period forms a small symmetrical triangle.

• Visualization: Picture a stock price rising sharply, then forming a small symmetrical triangle.

• Usage: Traders enter trades in the direction of the initial movement after the price breaks out of the pennant.

• Stop Loss: Place the stop loss just below the lower boundary of the pennant for a bullish pennant, or just above the upper boundary for a bearish pennant. For example, if the pennant's lower boundary is at $50, place the stop loss at $49.50 or $49.

6. Double Top/Bottoms

Double Top:

• Definition: A bearish reversal pattern that forms after an asset reaches a high price twice with a moderate decline between the two highs.

• Visualization: Imagine a stock price rising to $100, falling to $90, rising again to $100, and then falling again. The two peaks at $100 form a double top.

• Usage: Traders sell or short the stock after the second peak, expecting a decline.

• Stop Loss: Place the stop loss just above the second peak. For example, if the peaks are at $100, place the stop loss at $101 or $101.50.

Double Bottom:

• Definition: A bullish reversal pattern that forms after an asset reaches a low price twice with a moderate rise between the two lows.

• Visualization: Picture a stock price falling to $50, rising to $60, falling again to $50, and then rising again. The two troughs at $50 form a double bottom.

• Usage: Traders buy the stock after the second trough, expecting a rise.

• Stop Loss: Place the stop loss just below the second trough. For example, if the troughs are at $50, place the stop loss at $49 or $49.50.

5. Deathline

Definition:

• A critical support level that, if broken, indicates a significant downtrend.

• Visualization: Picture a stock that has a strong support level at $50. If the price falls below $50, it’s considered a deathline, indicating a potential for a sharp decline.

• Usage: Traders sell or short the stock when it breaks the deathline, expecting a significant drop.

• Stop Loss: Place the stop loss just above the deathline. For example, if the deathline is at $50, place the stop loss at $51 or $51.50

4. Trendline Breakout

Definition:

• A trendline is a straight line that connects two or more price points and then extends into the future to act as a line of support or resistance.

• Visualization: Picture a stock in an uptrend, with a line drawn connecting the lows of the price movements. When the price breaks below this line, it’s a trendline breakout.

• Usage: Traders enter trades in the direction of the breakout, expecting the trend to continue in that direction.

• Stop Loss: Place near prior bar low or at below break of trendline

1. Support/Resistance

Support:

• Definition: A price level where a downtrend can be expected to pause/bounce due to a concentration of demand.

• Visualization: Imagine a stock price falling to a certain level, say $50, and then bouncing back up multiple times. This $50 level is the support.

• Usage: Traders buy at support levels, expecting the price to rise.

• Stop Loss: Place the stop loss just below the support level. For example, if the support is at $50, you might place the stop loss at $49.50 or $49.

Resistance:

• Definition: A price level where an uptrend can be expected to pause/reject due to a concentration of supply.

• Visualization: Picture a stock price rising to $100 and then falling back down multiple times. This $100 level is the resistance.

• Usage: Traders sell at resistance levels, expecting the price to fall.

• Stop Loss: Place the stop loss just above the resistance level. For example, if the resistance is at $100, you might place the stop loss at $101 or $101.50.