Getting Started with Technical Analysis | Lesson 6

Hello everyone, and welcome to Schwab Coaching. My name is Cameron May. I'm a senior manager here at Schwab and an education coach, and this is Getting Started with Technical Analysis. And over the last five weeks, we've been working through a series of lessons that are intended to take the new chart user from no knowledge of charts to a relatively good degree of comfort with using charts to plan and place trades. And today is Lesson Six, and this might be, well, at least historically, this has been one of the most more popular lessons that I've taught, because when someone's starting to learn about charting, commonly they'll just say, you know, coach, just skip right to the end. Can I just learn when to buy and when to sell? Well, that's what we're talking about today.

We're talking about entries and exits for both bullish and bearish trades. Should be a lot to discuss. Before we can get into that, let me first of all say hello to everybody that's already chatting in. Great to see PineTree64Z, BJ. Robert, David, Ocean Life, Will, Michael, Speak Truth, Michelle, and everybody else. Thanks for joining us week after week. We really do always appreciate your attendance and your contributions in these discussions. If you're here for the very first time, want to welcome you as well. And if you're watching on the YouTube archive after the fact, enjoy the presentation, but be aware that you're invited to join us in the live discussion. This one kicks off promptly two o'clock Eastern on Tuesdays, and we'd love to have you here whenever you wanna join.

But I also want to point out that my very good friend, James Boyd, is here with us. He's hanging out in the chats with us. He's gonna be helping our live stream audience with any questions that they have that I can't get to, as long as they're on topic for this discussion. James is there to pick up the slack for me. Thanks for being there, James. And James and I would like to issue an invitation to everyone, whether you're in the live audience or watching on the archives. If you're not following us on X, please do, it's a great resource, the best place to connect with us in between these live streams. So you can find James there, at James Boyd CS.

You can find me on X, at Cameron May CS. But let's get right into it, talking about entries and exits today. But before we can get to any of that, first thing that we need to do, of course, is to consider the risks associated with trading. That is real. Risks are real. So please bear these important disclosures in mind. The information here is for general informational purposes only and should not be considered an individualized recommendation or endorsement of any particular security, chart pattern, investment strategy. While this webcast discusses technical analysis, other approaches, including fundamental analysis may assert very different views. Schwab does not recommend the use of technical analysis as a sole means of investment research. All investing involves risks, including the loss of principle, and any investment decision you make in your self-directed account is your own responsibility.

Okay. So let's set the agenda for the day. So again, we are in lesson six of the eight intended lessons for this series. If you need to find those, you can find those on our Trader Talks channel under the playlist. But here's the agenda for Lesson Six: We're gonna be reviewing some common bullish and bearish technical signals, meaning chart signals that can be used for potential entries and exits-for when to buy and when to sell. We're attempting that to address that huge question. And I think that a good way to address that is to talk about it in theory, but also to make sure that we're getting some applications. So as we go through each of these, we're gonna be looking at a couple of potential buy signals, a couple of potential buy signals for bulls, a couple of potential buy signals for bears, a couple of potential sell signals for bulls, a couple of potential sell signals for bears.

And we're gonna be illustrating each of those with examples on the Thinkorswim desktop platform. So we're gonna review those signals and then discuss how to apply those techniques using example charts. So here we go. Entries are where we're gonna start. I think that's for some people, this sort of fun part. It's always fun to find something new to buy, so we're going to talk about bullish entries and bearish entries. And we're going to begin with something known as a bounce. So we've already set the stage for trend analysis and for different types of trends, even within, let's say, a nice bullish upward trend, if a trader has strong convictions that a stock is looking good, it's making higher highs and higher lows, there can still conceptually be better or worse times to join that trend.

So yes, the trend is a pre-qualifier here. So when we're looking for what we call a bounce entry, first thing we look to is the trend. And acceptable trends for some technicians are either up trends or sideways trends. But within those trends, we're still looking to buy down at lows. So the trader is typically looking for price to fall down to support and then begin to rise again off that support. In other words, what we call bouncing up off of that support. So as you can see in our graphic here, here we have kind of an example of a stock that was going sideways and it started to pull back. And for some traders, when they see that stock approaching lows that had been previously established as support levels, might get them excited for a potential entry.

But if we try to buy while price is still falling, for some, they see that as trying to catch a falling, and so they might want to see that momentum has returned to price. The buyers have returned, they're outstripping the sellers and starting to drive price back up. And so they look for price to rise off those price floors as an entry or what we call a bounce. So for some, it might just be enough to see a green candle or a clear candle on their chart, an empty candle on their chart. For others though, they'll look for a specific confirmation, of a bounce entry known as a CAHOLD. That's a bit of an unwieldy acronym, but I got to tell you it's the best acronym I'm going to be able to provide for you today.

But a CAHOLD is an abbreviation for a trader who's looking for price to close above the high of the low day, close above the high of the low day. The first time you hear that it's a bit of a mouthful, but here's what we're talking about. As price is pulling down, trader is waiting to see if that knife stops falling. So they're literally watching from day to day, did the lows, did the day-to-day low go even lower? If it has, maybe that knife is still falling, price is still falling. However, if prices start to rise again, so the lows stop going down and we get a close above the highest point of that lowest day, that's the entry, close above the high of the low day. Ram says, works for you, the CAHOLD entry?

Right, now this is just an example of one of those potential entries. It's not me, you know, making a sales pitch. This is the only way to do it, but it is one that's commonly used. So let's go look at an example of that. And the first chart that we're going to be using for today is going to be AMD. First of all, what's the trend here? Well, this is an example of a stock that's maybe starting to make higher highs and higher lows. As we've learned to establish an upward trend or a downward trend, we like to see at least three touch points, in this case, along a rising support floor. So we have an upward trend established. Now look at what's happened very recently with price.

Price was up at a previous ceiling, up at a previous trend line resistance, pulling down to support. So I'm going to zoom in on this so we can get a closer view of this. And what the trader might be looking at are the day-to-day lows, because the first objective here is to identify what we call the low day. It's literally the one that sticks its little tail down the furthest. So we start up here at the top, we move down, that low is lower. This low wasn't quite as low, but notice the highs are still moving lower. Lows are still going lower again and lower and lower and lower. Here, we might identify this as the lowest day. And I'm going to give you some practice in just a moment with another chart, see if we can spot those low days.

But here's our lowest day, sticks its tail down the furthest, also happens to be fairly cold. And that's coincident with, or close to our previously established upward trend line. So it's a combination of technical observations here. Trend first, at support, bouncing off those lows. So if this is our low day, the trader who uses this cold entry now looks for price to rise above the highest point of that lowest day and to close there. Now we're gonna, We're gonna be splitting some pretty fine hairs here. Look at the high of this low day. As we point at that, we can see the high right up there as the H. H for high. So our high was 153. 45. So to get a qualified hold entry, the trader is looking literally to see if we can get a subsequent close.

Tomorrow, the day after that, the day after that. Some day after this one that closes above that high. So that would be above 153. 45 or at least a close of 153. 46. The next day is another red candle. It closed pretty close to that high. Where did we close? $153. 44, That is a penny shy of what we're looking for. We're looking for a close above the high of that low day. Well, we certainly get it here. Closed up here, top of this white candle, or top of this white body of this candle. So here might be considered our bounce entry day. Right there. Closed above the high of the low day. So yeah, there can be some finer points to learn as we are learning these approaches to identifying entry signals, but they can be important.

So that's a bullish bounce entry. What about a sideways example? Let's go back to our chart. And how about we look at it. Let's say CDNS. Well, bounces can be used in up trends. They can be used in sideways trends. And as we'll discuss in just a moment, they can also be used in downtrends. So here's an example of a stock that's just been going back and forth between similar highs and similar lows, support and resistance on a horizontal plane. But in this case, we're still looking for price to come down to those lows. I'm gonna zoom in on this and we're gonna have to split some fine hairs here again. Which candle is our low day? That's question number one. And then which candle is the hold entry day?

So here we are pulling down. Here's the low of this day. Low, lower, lower. Ah, we didn't get above that high. So we continue lower, lower. If you said this is the low day, you're correct. That's the one that stuck its little tail down the furthest. Now look what happened over the next couple of days. Did not close above that high. We're looking for a close above. This high. Didn't make it here. Didn't make it here. And then we got it here on the third day. If you said, it's not a very good oval, but in any case, if you said this was the low and this was the hold entry, that's a correct identification of that entry signal. So notice uptrend or sideways trend.

So let's go back and start talking about the next type of potential entry signal. And that is a breakout. Sometimes we're looking for a bounce off support. At other times, it might actually be a breakthrough resistance because those price floors and price ceilings can generate signals in a couple of ways. If we're down at a floor, I think it's natural for a trader to say, wow, we're back down at those lows, might be time to buy. But if we're up at highs and we're expecting price to go down and it pushes up and through, that can also be seen as something new that can be exciting for a technical trader. And it may generate its own signal.

But in either case, in the case of a breakout, we're still looking at an upward or a sideways trending stock with price rising up to a resistance, a price ceiling, but then pushing through. Now, since we're pushing through for some traders, they like to see a confirmation of that signal in the form of volume. So for some traders, they look for the breakout to be confirmed with above average volume. So in this example here, we've risen up to a price ceiling, price is pushing up and through that, closing above it for the first time in months in this example. And you'll also notice there's fairly high volume at that time. So let's go look at an example of a breakout signal. And I think what we'll do here, how about we look at a sideways example first here?

So here's General Motors. And oh, and by the way, before we get to this example, I did notice that there is a survey that's been added to the chat window for those that are here in the live stream. So do this for me, if you would, as a favor, just click on that survey link right now, and then give me some honest feedback after the webcast is over. But I'll always like to say a couple of things about those surveys: number one is they're very short; two multiple choice questions, a comments box, and a suggestion box. Second thing that I like to say about those surveys is that if you take the time to fill them out, they go right to me. I'll take the time to read them, but I'll take the time to read them.

I'll read through that data and read through your comments and it definitely helps. All right, so let's get our attention back on this chart. Thanks for doing the survey for me. But in any case, here we have General Motors that actually first toyed with the $50 level all the way back here in July, pulled down way down below 40. And then it kind of settled into a trading range below, between about 44 and about 50, back and forth between those highs and those lows. And so for some traders, they may have been initially preferring to buy down here at these lows, but they might also recognize this isn't likely to continue forever. And they may wanna be able to trade regardless of whatever new direction develops, maybe trade in that new direction.

So in this case, this most recent approach to that $50 resistance that had held for months and months and months and months, touching time after time after time, we finally pushed up and through that. Actually, this is kind of an exaggerated example, big move right there on October 22nd. And so for some, they would refer to this as a breakout. It broke out of this established pattern of trading and maybe moving in a new direction. And that can be potentially an actionable signal. But for some, as I mentioned on that slide, they like to see a confirmation of an increase in volume. So let's add volume to our charts. So we're gonna come up here to our chart settings. We're gonna go to the equities tab and just make sure that the volume sub graph is being displayed.

Let me click apply and click okay. And as you might've suspected, with a candle of that size, not every big candle is accompanied by a big volume, but in this case, it was. And for some traders that might say, there seems to be some new conviction here among these buyers and sellers that were sort of stuck in this sideways behavior. There was kind of a tug of war going on. It looks like there's a big new crew of buyers have shown up ready to take us in a new price. Yeah, Harley, so yeah, we might wanna take a look at that breakout volume. So that's an example of a sideways breakout. Not every breakout is in a sideways trend. Sometimes we already have an uptrend and then that trend steps it up a notch.

So here we have prices rising and falling, rising and falling between support and resistance. Maybe the trader is looking to buy at support. Sell at resistance, possibly. That's kind of a spoiler alert for exit signals. In any case, here we can see price has risen up to where we might've suspected that ceiling was gonna manifest itself once again, after doing it a number of times in the past. But instead of going back down to support, it looks like that balance between buyers and sellers still tilted toward the buyers. And we pushed up through that ceiling. And in this case, a little bit of an increase. Let me zoom in on this. This doesn't look like much. See this breakout day, you might look at that at that volume histogram bar and think, ah, that's not very impressive.

Actually, that was the second highest volume we had seen in a month and a half. So was that above average volume? Yup, and to some traders that might just look like more buyers than normal. Taking us into this new sort of uncharted territory might make them feel better about that as an entry. So bullish bounces, bullish breakouts. We can actually take that new knowledge and sometimes a trader will look for exactly the same thing, but in the opposite direction. So let's talk about bearish entries. And I wanna introduce you first of all, to a new acronym. It's a new acronym, but the same concept as a bounce. So, yeah, I said that the CAHOLD, it's not a great acronym, but it's the best one you're getting today because the CAHBLODE to me just certainly just doesn't roll off the tongue, but it tells the intended story.

You can see the acronym meaning right down here, but let's talk about looking for bearish bounces. So, first of all, what sort of a trend do you think the trader might be looking for if they're switching from a bullish outlook to a bearish outlook? Well, now we might be looking for sideways – sideways still, or a downtrend. Now within that sideways or downward trend, we look for price rising to resistance instead of falling to support, rising up to highs. If a potential bearish trader is looking to hopefully make money as price falls, they might wanna enter as we're hitting peaks rather than valleys. So price rising to resistance and then beginning to fall again or bouncing off that resistance level. Yeah. Michelle, you got it exactly right. A downward trend or sideways.

In this case, we had a sideways trend and then we fell down through that, started into a downtrend. And as we attempted to rally up against resistance, we bumped our heads there and we have a potential bounce. And you might just look at it as a shift of momentum. Prices were rising and now they're falling, or the trader might continue to bounce. See all the trends? But they seem to confirm the bounce using their acronym, KABLOD, which is to look for price to close, instead of closing above the high of the low day, we're looking to close below the low of the high day. So as price is rising toward resistance, we look for the highest day, so it's literally the one with this little candle wick that sticks up the highest.

And then we look for a subsequent day to close below the low of that high day. So here's our high day. And it looks like just a couple of days later, it's going to close below the low of the high day. So here's our high day. And it looks like just a couple of days later, it's going to close below the low of the high day. Closed below the low of that high day. In other words, the bearish momentum may be kicking back in. So let's go look at some bearish bounces and how about we start with a chart of BDX. So this one is a sideways trend. This stock really, boy, it really settled into a sideways behavior, but in particular found a price ceiling right about, what is that?

About 244-ish. As we learned, support and resistance levels are areas or ranges. Yeah, so we'll just call this the area of 244. And as price rallies up there, the trader may look for the candle that sticks up the furthest. And then we look for a close below that. So let's zoom in on this one. Which one is the high day? Well, it's this one right here, literally. The one that stuck its little candle wick the highest, and then the trader is looking for a confirmed bounce in the form of a close below the lowest point of that high day. And you can see in this case, right there, October 2nd, the very next trading day, we close below that level. So that's a bearish bounce in a sideways trend, but a trader might also look for, what, a downtrend?

Yes, let's go have a look at a downtrend. Let's look at Adobe. So here's Adobe, and it's had downtrends in the past. Big gap down. We talked about gaps maybe acting as establishing new trends. In this case, we ran down to a low, pulled up to a peak, ran down to a subsequent low, up to another peak. So now we have three touch points. Let me zoom in on this most recent visit to those highs, which is our high day. Well, it's gonna be this one. The high day's not always obvious. As we saw earlier, sometimes we can be splitting some pretty fine hairs, but in this case, fairly clearly, this was the high day, right up at resistance. We'd be looking for a close below the low of that high day, and we got that on this day, so October 16th.

So the trader has a downtrend. They're up at a price ceiling, and now, even the day, the day-to-day price momentum seems like it's in keeping with that trader's technical outlook. So those might add up to a trader feeling fairly confident that it might be time to enter. Now, that's not the only potential bearish entry signal for the bears. And when I say enter, I shouldn't say buy. That tends to be associated with a bullish position. Let's just say enter, okay? This is a bearish entry signal. Well, there's another potential bearish entry signal, and you probably already guessed what it is. It's a breakout, and in this case, same trends. We're looking for down or sideways trends, with price falling to support, and then pushing through that support.

And just like with our bullish breakouts, commonly, our trader is looking for volume to confirm this new direction that the stock seems to be taking, although I will say it's been my experience, at least, that there are, and again, just in my experience, more bears that are okay with entering, even if there's not volume confirming, versus bulls. Typically, bulls might prefer more of a push to confirm, because there's a phrase out there, I don't know if you've ever heard this phrase, but you'll sometimes hear that a stock can fall of its own weight. That just means, even if the volume's not there, if a stock is already going down, it can just tend to go down without any additional help, I guess, is the common sense.

I guess, even if the volume's not there, if a stock is already going down, it can just tend to go down without any additional help, I guess, is the common sense. I guess, even if the volume's not there, if a stock is already going down without any additional help, I guess, is the common sense. But there's our example in our graphic. Here we have price going down to support, rising up from support, back down to support again, breaking through, preferably with a spike in volume, but not always. Not every trader has that specific preference. And just as an extra reminder of our discussion about support and resistance levels, in this case, price rallied back up, and that previous support appears to be acting as a new resistance, maybe a trader even looked at getting a bounce right there.

Anyway, let's go see some breakout examples. And so our bearish breakout, how about our first one? Let's look at a sideways example with TMO. So here's Thermo Fisher Scientific. Here's our stock that had kind of settled into a sideways range, resistance up here, support down here, put yourself in the shoes of someone who's trying to take a bearish trade. If a price floor has held for weeks and weeks and weeks, and it previously acted as a ceiling, and they're feeling pretty good that that's a floor, and then it fails as a floor, you can see why someone might see that as a bearish signal. So in this case, we had a break, and you can see what volume is doing at that time as well. Volume rising, price falling below support.

That's an example of a bearish entry in a sideways pattern. But what about a downward example? How about CI? So here's CI, that had kind of gone sideways, started to work its way up, but then started hitting lower highs and lower lows, up against resistance, traveling down to support, and you can see really, volumes really kicking in here over the last week and a half, as we're pushing down through the lower portion of that trend line, that support level. So for a trader here, they might say, this really seems to be confirming bearish, and that could be a new entry signal. So now we have, it's not the only way to trade charts, but a couple of potential bullish entry signals, a couple of potential bearish entry signals.

As I mentioned, that might be the fun part of the trade, but this next one, for some traders, they consider this to be an even more important part of the trade, which is planning when to get out. When do we take profits, or when do we take losses? Just admit that we're wrong. So let's talk about exits, bullish and bearish, both sides of the coin. So we'll start with bullish, I always think that it's; it just seems to be maybe more intuitive to learn things from that bullish perspective when it's a new concept, and then just transfer that newly gained knowledge over to the bearish side of the equation, I think that's; for some people, just seems to be a more logical approach.

So starting with bullish exits, let's say, let's start with the fun part of bullish exits. Let's say that we have our bullish entry signal, and now we're planning, where do we take those profits? And for some traders, they have a plan in mind for where they're gonna take profits, even before they place the initial trade to get in to this bullish trade, and we call that profit objective a target, so this is a management technique for profitable trades, a target is a price level above the entry at which the trader plans to exit with their profits if they're achieved, it's always nice to think that we're gonna be 100% correct, nope, we need to plan for the other side as well, but a target is commonly identified using previous resistance or using what's called a measured move above a previous range.

Now, I would suspect some of you have heard this phrase measured move before, chat in yes or no, have you heard measured move before? What does it mean? Sounds cool. Well, measured move literally means you measure previous moves that a stock has made in the intended direction, and then we move forward with the assumption that hopefully the stock can just make that size of move again, so in this example, let's suppose that our stock, and I pick on these two price levels just to keep it simple, but let's say it's moving back and forth between $40 and $50, so $40 support up to $50 resistance, $40 support up to $50, and now we're up to 50 bucks again, but in this case, we're rising up and through $50, well, a trader might say, well, it was previously trading in a $10 range, maybe with this new entry signal in this now uncharted territory, maybe let's move another $10.

That's what we call a measured move target. Now, regardless of whether we have a previous resistance that gives us a more apparent target, or we're setting things up with a measured move target, this can potentially be applied using bounces or breakouts. So with this chart, with our example graphic here, a bounce trader might've just looked back at history and said, well, we're moving back and forth between $40 and $50, let's assume another $10 move to the upside take us back to 50, or in that case, it would be back to resistance. But on a breakout, we can look for a previous resistance. There's not one obvious on this graphic or use that measured move. So let's go get some examples in real life. It's always fun to talk about theory.

I think it really ingrains the learning to get some application. So let's go back to our AMD example. And this, we have a support bounce. We have our range established. So with our entry signal bouncing off and we have our close above the high of the low day where might a trader, how might a trader establish a target here? Couple of different ways they might do that. They might look at previous moves like this one and this one. That looks like we moved from 122 up to 165. Well, that's pretty good solid move. Actually, that's about 160. But let's call it a 30. And this next one, we went from 133 up to about 173. It's about a $40 move, 35-ish, 40-ish.

So if we're starting a new move down here at about 152, where might that project a target to be? Well, that might be up to, let's say 152 plus 35, about 187-ish, maybe up to that 190 level. Or yes, we might just use our drawn trend line to help us establish that target. Now, another thing a trader might do in this case on a bounce entry is just target a previous resistance like this one, particularly if there are other touches at that level. And it looks like there's been some history of maybe that 175 level being a price ceiling. So there can be some discretion that's applied, but the concepts are consistent with what we've learned, resistance or measured move. Now, an example, that's an example of an upward trend, and that's a bounce example.

How about we look at a breakout example? Let's go back to our GEM. So here's General Motors. This was trading back and forth between 44 and 50, if you recall. That's about a $6 range. Well, on the breakout, here's a difficulty that is commonly encountered by breakout traders. Where's the resistance on our chart? If we're looking back to history, where's some price that we've visited before? There's not an example on this chart. So the trader in this case might just use that measured move. So if we had a $6 wide range or channel previously, and we're breaking out at $50, that might project a move up to 56. Notice in this example, we're not there yet. We got 54 and we've been pulling back.

And maybe coming back down to these levels could go all the way back down and invalidate the entry signal in any case. So bullish bounces and bullish breakouts can both have targets. They can both be established with measured moves or with previous resistance. What about, let's go back here. What about planning for the downside of the trade? It's always fun to talk about the trade working out, but what about those times when we take an entry and it just doesn't pan out, the stock is uncooperative, it goes the opposite direction. A trader will commonly just have a plan for that right up front as well. And we'll refer to these as stop plans. Now there's an order type known as a stop, and it's never a guarantee when we're using a stop that that will get us out at an exact price level.

Nonetheless, the trader commonly has a plan for that. So this is a management technique for unprofitable trades. It's, it's a plan to exit at a price level below the entry price at which the trader plans to exit with the losses if that level is reached. A stop is commonly placed below the previous support or the broken resistance. So in the case of a bounce entry, we're commonly placing our stop down below support because it was support that was the purpose, it was the point of the entry in the first place. With a breakout, it was the resistance, that was the purpose for the entry. So if, if either of those are invalidated, maybe it's time to get back out. But here's that, that last reminder again with stops, it's not a guarantee that we'll exit at a specific price.

So in the example in our graphic here, let's say our trader is looking at this breakout and they were thinking, maybe we're on our way up to a target. Maybe it's going to be a measured move target. Possibly it's not going to do that. So if price falls back down below that, that price ceiling, well now it's just falling back in the old trading range. It's going the wrong direction. And maybe the trader has a plan to get out a few dollars or a few percentage points below that broken resistance level. The distance below our resistance or support is going to vary from one trader to the next. But the consistent, the consistent principle there is that there's a plan to manage losses. Whether it's 2% or $2, whether it's 1% or $1.

So let's go to our examples here. And how about we just stick with General Motors? If the plan was we're getting in on the break of the price ceiling and we thought we're going to get up to fit, let's say a $56 target, it's perfectly likely we don't ever get to that target. And as a matter of fact, we're falling short right now. So where might the plan, where might the trader take that? What are their losses here? Well, if we start to get back below $50, so they may have a plan somewhere, you know, it might be $49, might be $48, it might be 2% below $50, he's going to put it in the $49 range, whatever.

But yeah, if we slip back down below their broken resistance, invalidating the purpose for the entry, maybe it's time to take the losses. So that's in the case of a breakout. Well, what about our bounce example, AMD? With our bounce, we were coming off a support level. We think that we might rise up to our target, either up to this previous resistance or up to our trend line. Well, what if price falls? Well, in this case, we might get out, if we fall below that support, a quick way with bounces is to look back to that low day and then just go a dollar or two or percentage point or two below that level. But the ultimate concept there being getting out because the support level has broken.

So, there are bullish entries, or bullish exits. We have bearish entries. Let's talk about bearish exits. So, bearish exits is really, really just the inverse of what we just learned with bullish exits. We plan for the best, also plan for maybe not the best. So, bearish exits might also include a target. This is a management technique for profitable trades. The target is a price level now below the entry at which the trader plans to exit with profits. And I know that we're doing the reverse. So, sometimes we have to reverse the language. It can get a little bit confusing, but if the entry is up here at resistance, our plan might be to get back down to support and then exit at a target.

This is commonly identified using previous support or using a measured move from previous moves. And this target exit can be used either with bounces or breakouts. So what's a target exit example? For our bears, we need to go back to some of our bearish examples. How about we look at, let's go back to TMO. So with this stock, again, we're talking about the fun side of things. We've broken below a price floor around that five, I'm gonna call it 585. Looks like our resistance was up there at about six. I'm gonna do some real generous rounding here, call it 625. So that's about a $50 range. So if we've broken that 585 level, where might the trader expect to maybe take profits? Maybe down at 535.

That would just be expecting prices to move in a relatively equivalent range to what they've been doing previously. Now, another thing a trader could do, this is one of the techniques when drawing things using a channel tool. We've drawn with a channel before, but once we've drawn a channel, we can actually right click on a channel and duplicate it. And then we can click and drag that duplicate down over a channel. So if we overlap it with the original range, that might just save us some mental energy in calculating a target. And it looks like, yeah, I was a little bit generous there. 535 might be a little bit lower. This looks like it might be closer to 550. But another thing that a trader might do instead of using this measured move is to look at previous support levels.

So in that case, maybe our trader could say, I think we might get all the way back down here to support. So taking profits on their bearish trade there, or maybe taking profits bearish trade there. That's in the case of a breakout. What about a bounce? Let's look at, let's see. How about, let's look at CI. Let me see. Did I get a CI or a bounce example? I believe I did. Hold on a second. I need to go back. Let's see our bearish bounce. We had, we actually had BDX. Let's look at BDX. Ah, yeah, here's BDX, where we've risen up to the top side of our channel. There's our resistance. We think that it's going to pull down to support. Where's that support? Well, that's going to be right down around that 230 level.

So with a bounce entry, very commonly it's going to be a little bit easier for the trader to plan those target exits, but it's also possible a trade could fail just like with a bullish trade. So where might the trader plan to take losses? So using stops. Yes, there's such a thing as a stop on a bearish trade. This is a management technique for unprofitable trades. Typically a price level above the entry at which the trader plans to exit with the losses, if reached. Stop is commonly placed above previous resistance on a bounce entry or above broken support on a breakout entry. But as with the bullish stops, it's not a guarantee that we're going to exit a specific price. So let's go look at a bounce and a breakout.

So as a matter of fact, we can just stay right here with our bounce entry on BDX. We think price is going to go down. Target plan is to take profits down. It's down here around 230. But if price starts to rise up above 244, you can imagine how for some traders, they might say, 'Wow, we haven't been above 244 in six months.' This looks really bullish. It's not what a bear wants. So they might plan to get out a dollar or two, a percentage point or two or three above resistance in the case of a bounce. So the plan might be to maybe take losses up here. In the case of a breakout, let's go back to our TMO example.

Now this one's possibly already panned out, but just put yourself back in the shoes of the trader who got into a bearish trade on the breakout right here, thinking price is going to go lower. And then it starts to rally instead. Well, if it goes back up above the support, now we might be back in this trading range and we could go higher still. So the plan there might be to just take losses, if we get a few dollars or a few percentage points back into that trading range. So there we have it. When we set out today, we wanted to talk through bullish and bearish entries and exits, providing a couple of examples of different types of each of those. So that's quite a bit heavy lifting for just one discussion.

If you need to put some of this into practice, might be time to go to your paper money, start looking for bullish and bearish, bounces and breakouts, planning targets and stops for each, now there's a little bit of homework to do. But putting new knowledge into practice, I think was where we really cement that new knowledge. But everybody, we've done what we set out to do today. We've even looked at these theories through real examples. And so got it done. Everybody, thanks for giving me your time today. Thanks, James, for helping out in chat. Thanks for reposting that survey again, James. Yeah, everybody, you can now click that survey and provide me some good honest feedback. If you do that, that would be great.

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