Hey There!
Today I wanted to look at the chart for THC: |
THC is in a slight upward trend, with big moves up and down along the way.
A lot of people see a chart like this, and they like to outline the channel. This way they can watch for breakouts above and below, or even play the bounces between the channel lines. That would look something like this: |
You can see that even recently, THC hit that channel top boundary and failed almost instantly just like it had done in the past.
Using this information, you could justify a possible short entry.
So what would the target be?
$72 is the bottom of the channel… Could that be our target?
It could be. Especially in this market.
But if you look at the chart, you can see that the bottom trend line has only been hit twice.
One thing I’ve noticed when folks heavily rely on channels, is that it can sometimes give them tunnel vision… (literally)
It’s easy to ignore other support and resistance levels that could slow or even act as bounce levels.
Like any of these: |
I think using channels to spot trends can be great!
When they show steady support and resistance, those levels can be pretty reliable.
But it’s important to be aware of recent levels.
Like right here where we can see a few days of heavy volume: |
That could act as a support or at least slow things down (which is important if you’re trading options).
I do think we are at a key level for THC.
Any bounce here could set up a reversal… a strong move down past $85, could cause a squeeze down.
Let’s keep an eye on things, to see how it plays out!
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Hope to see you Monday!
Happy Trading
Markay |
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