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Todays Big Stock Wealthpop News

How To Increase Your Chances Of Being A Profitable Trader


Arch Capital Group (ACGL) is forming a classic head and shoulders pattern, which as you can see in the video below. This is typically a bearish chart pattern, signaling that the stock may be getting ready to break down. Since the pattern implies lower prices, a put position is likely the highest probability trade here. After the second shoulder is formed, we typically watch for the price to break the “neckline.”

In addition to this chart pattern, we also have momentum divergence with negative momentum on RSI that corresponds to the higher price peak or the head of the price pattern, a sign that the stock is losing out on that pace to the upside. We can us this as a second confirmation, in addition to the bearish chart pattern.

As traders, when we are looking for the highest probability trade, one of the ways we determine whether or not a trade is high probability is to find more than one confirmation. Our trade in focus today is a great example of what I mean by that. Not only do we see a stock that is forming a bearish chart formation, but we see that there is a momentum divergence, as well.

Most of the time, a chart pattern is not enough to determine whether or not you should take a bullish or bearish stance on a stock because there is always a chance it will not play out like the last time you saw this pattern. However, if we confirm that pattern with two or more confirmations, then we increase our conviction in the trade and can feel more confident about how we position ourselves.

I urge you to watch the full video breakdown to learn more about his pattern, as well as the momentum divergence that helps us confirm what the pattern is implying. Learning to have more than one confirmation in your trading will save you the headache, and ultimately, a lot of money.

Learn to find these levels for yourself when you join The Profit Machine. There, you’ll learn all about my favorite stocks, setups, strategies, and plenty more. You’ll also be invited to weekly webinars where I answer questions and go over important trading lessons, like the one in today’s article. The best part, you’ll also receive live trade alerts. Not only will you get a world-class education, but you’ll earn while you learn.

Get a jump start on your options education and put yourself in position to win in 2023. Sign up today! Until then…

Good Luck With Your Trading!

Christian Tharp, CMT

Christian Tharp

I am an expert stock market coach having helped over 4000 beginner and advanced traders & investors from around the world take control of their financial futures. I also write stock market related articles for the Adam Mesh Trading Group. My Chartered Market Technician (CMT) designation substantiates me as an expert in areas such as the technical analysis of stock trends, market indicators, cycles, price patterns, Elliot Wave principles, Candlestick charting, analyzing financial trends and behaviors, portfolio strategies, and forecasting future price movements. With my straightforward approach to simple, systematic trading, students learn how to strategically assess buy signals and market entry timing, establishment and management of stop losses, and how to employ a simple and disciplined trading approach that creates profits.

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