Good afternoon, everyone. Welcome to our webcast on getting started with technical analysis, where we go into some of technical analysis principles that are going to be really helpful to you. Last week, we started with RSI, the Relative Strength Index. We kind of did a part one. We' re going to do part two of that today and kind of wrap it up in a tidy package and learn how to use it a little bit better this week. I am joined in the chat by Lee Bohl. I' m happy Lee' s here. He' s a great technician. He is also a CMT, Chartered Market Technician, which means we' ve gone through a program studying technical indicators and how we might be able to use them in our trading.
I want to give a quick shout out to those of you that are here early today. We' ve got Sandeep, Kevin, Josie, Robert, Sim, Jeff Wade, which I told Jeff I have two cousins named Jeff and Wade, Roger, Kathy, Ranjit, Scott. Scott, happy that you' re all here today. Let' s go through some disclosures. We' ll lay out our agenda and get going. I' ve got quite a full agenda for us here today. What we talk about is intended for informational and educational purposes only. You shouldn' t consider it an individual recommendation of any sort. We do talk about technical analysis here. However, Schwab does not recommend this sole use of technical analysis as your investment research. We' re going to be using the downloaded Thinkorswim software, PaperMoney.
It' s the most robust of the versions of Thinkorswim. Past performance is not a guarantee of future results or success. Stark markets are volatile and can decline significantly in response to adverse issuer, political, regulatory, market, or economic developments. Investing involves risk, including the loss of principal. Now, today, we are going to focus on one specific indicator, RSI, as I mentioned to you. And we' re going to be taking a look at a list a little bit more in depth in how you might be able to apply using it. Of course, we' re going to be doing some example trades and following up on our example trade from last week. So when we' re talking about indicators and oscillators, they can vary on what exactly they are.
There' s some trend indicators, which usually are moving averages. But usually, the breakdown of any technical analysis is some modification or averaging of prices. And that' s something that' s going to be going to be very important. And that' s going to be the most dominant thing And that' s going to be the most dominant thing So you' ll hear the phrase, ' price is king', which basically means whatever the price action is doing, that is the most dominant thing to pay attention to. Oscillators are indicators that are typically displayed in a separate menu. On our screen here, we' re using the MACD as an example of that. Sometimes they have ranges. Sometimes they don' t have ranges. A MACD, for example, doesn' t have a fixed range.
RSI on the other hand, is a range that is not fixed. RSI, on the other hand, does. Now, Wells Wilder, who created this oscillator and published it, I think it was like in 1974, he wanted to solve for a couple of problems. Now, one problem he wanted to solve for was the fact that sometimes you' ll see a real sharp drop off when you' re averaging some numbers. Maybe you have an average in there or a number in there that' s really big and maybe escalating up what the average is of a price, whatever' s going on. And then when it' s going up, it' s going down. And then when it' s time for that indicator or that data drop off, sometimes you' ll see a real sharp drop.
And so he wanted to create something with kind of a smoothing effect. He also wanted to have some ranges. And so on the RSI, the range goes from 0 to 100. Can' t go higher than 100. And that is what he was trying to solve for. And kind of having some commentator or maybe reflections, maybe, of the price action. Where he said, all right, on an RSI, 70 or higher means that the stock' s overbought, which really means bullish. 30 and lower would mean that the stock is oversold. And sometimes that has the connotation of being bearish. All right, let' s jump in. Let' s look at some examples here today. Oh, I do want you to follow me and Lee on X. I' m ConnieHillCS.
And Lee. He does a lot of great posting as well. He is LeeBohlCS. And just checking to see if there' s anything I need to address in here. Doesn' t look like I do so far. All right, let' s jump over here to do our Thinkorswim. And we' re going to start out looking at a couple of things from last week and the week before. Two weeks ago, we talked about DMI. And using it as an indicator, paper money is a great educational tool. But it is not perfect in every respect. It acts a little bit differently than what we might expect out of a live account. One of the things it doesn' t do especially well is stock splits. We did a trade on Nvidia knowing it was having a 10 for 1 stock split coming up.
For our position sizing for the class, we just did a couple of contracts. However, I want to kind of point out a couple of things to you here. The trade price. The trade price. Let' s get that again. The trade price was $1,128 and change. Well, when the stock split took place, it didn' t go back and adjust this price. It didn' t divide it by 10. And so in our account, it looks like we have a big loss here. But in reality, we do have a winning trade. I wanted to show you how you can handle that. In reality, split- adjusted price would be $112 or $12. We would just essentially divide that by 10. Now, because the trade hasn' t hit an exit signal, we' ll go ahead and look at Nvidia here real quick.
We ll go ahead and look at Nvidia here real quick. Just kind of show you what the chart looks like. We have continuing in an upward trend. We see our DMI indicator here on the bottom. And remember, with the DMI, the DI positive is green. That means the bullish trend is dominant. DI negative is colored in red. And that means the bearish trend is dominant. So whichever line, green or red, whatever is on top is the dominant trending indicator. And so we can see on this, yeah, absolutely, the green is still well above the red, which means we would stay in the trade. We don' t have an exit signal. Furthermore, that ADX indicator, which is the black line in here, the ADX gives us a sign or an idea of how strong the trend is.
And so anything above 25, we would say, is strong. If it gets above 50, we' d say it' s very strong. Now, right now, on this ADX, it looks like it' s reading about 39. So that' s in a very strong territory, letting us know that the trend is still strong, the bullish trend. Now, in your paperMoney account, you should be able to have the ability to do what I' m going to show you right now. We want to adjust this price, OK? We want to basically divide it by 10. You can' t do this in your live account, right? Your live account takes a while. And we want to be very careful. I' m just going to click on this. And now, we' re going to say, OK, we' re going to say, adjust position.
OK? Now, it' s splitting in here the current price. And what we want to do is we' re going to say on the quantity, so we' re going to say 2 in our 2 quantity that we have there. We' re going to change that price to, get rid of that so uh one two eight and we' ll actually put our decimal right there we can go eight four okay so we' re just going to change that price to 112 we' ll just leave it as position adjustment we. ll say okay, and it did not do what I thought it was going to do. Should be changing that price there, and I did see an adjustment but I think it was just the price changing.
Let me try this one more time uh, to adjust position and uh, let me move up here just wanted to make sure we had seen our two quantity maybe you know I haven' t tested this out in this new demo account it might not allow you to do this so I' m not going to spend any more time on it I would have expected it to already change it but I' m not going to spend any more time on it, so I' m not going to spend any more for us okay. But it didn' t, so we' re just going to hit cancel and we' re going to move on. Courag Dr Pepper was our position that we got in last week KDP uh, on it we weren' Using DMI, we were using the RSI and what we saw on this stock
okay uh Jothy was saying hey don' t you need to adjust the quantity as well typically you do you tell it how many you want to adjust in that quantity. So can I adjust this in a live account? No, you' re never, you can' t do those kinds of things in a live account that you can do in a paper money account because it' s an educational tool that we' re working with here. So we' re going to skip it, we' ll move on. Yeah, maybe adjusting the quantity to 20, Diosa recommends, we won' t worry about it right now, okay? Okay, because you' re right. Let So do this, our trade last week, we got in here as we were seeing a breakout signal, okay?
At the same time that we saw the breakout signal on price, on our RSI, what had it done? It just broke through some diagonal resistance. We had drawn a trend line here, connecting those tops. And sometimes when you see that, some traders might say, I' m going to use that as an entry signal as long as they have price going up at the same time. Now, you don' t have to have a breakout like we had here, but we simply said, hey, we' re seeing that kind of as additional confirmation that price is looking strong. Now, exit signals, all right? Sometimes when we Re putting together some rules that we want to trade by, we might include and say, hey, I want the oscillator to be doing this.
Or we may say, you know, I' m going to use my typical price type entries, like a hold, a bounce, a breakout above resistance, a breakout of a particular trading pattern, like a flag or a triangle. And you might just use an oscillator as you just might consult it. It might not be built into your rules. Now on this stock right now, yeah, it kind of went sideways for a little bit. It pulled back. It hasn' t made a lower low, right? If it made a lower low, it' d get below this candle here. So really it' s still just following the trend, even though it' In a kind of a bit of a pulling back. So we' re going to leave this stop where it is. We don' t need to adjust it.
And we' re going to let it carry on, continue to trade until we get an exit signal, which would basically here, we might consider a lower low, or maybe if it broke down below this support area at 33 and change, somebody might consider getting out there as well. Of course, we have our stop there that would get us out of the trade because that would be showing some significant weakness. Now let me come over to the chat, see what your questions are. Truth says, thinkorswim is slow to adjust the risk analyzer. It' Showing old prices in Nvidia. It very well may be in trades that took place while the stock split, prior to the stock split. Yeah. That very well could be the case. Again, it' s an educational tool.
You guys, Cathy, Sim thought the same thing as Cathy. And Cathy was saying maybe you need to adjust your quantity. Again, I' m going to skip on that. If we have time at the end of our session, I may go back and play with that. Ranjit says, looking at the DMI, your colors are different. You' re right. I changed my colors. And what you do, just bring up the study, if you want, the DMI up. Just go in the search area here, type it in. And then what I did, Ranjit, click on the gear. And then you' re going to work down in this area here. So DI positive was like a width of one. And I don' t remember what color it was. I think it was like purple or something.
But green is more intuitive to me. That adds maybe a little bit more bullish. The DI negative, I changed to red again. That coloring has meaning to me. And then on the ADX, I changed it again to a three. And then the color here, I changed to black. But just click on that block. And you can pick any color you want or a variation of it when you go down into more if you really want to fine tune that color. All right. Thanks for asking that. Trey says, actually, that' s happening in your live account. That' s interesting. OK. Let' s carry on. We talked about the DMI. So a little summary here of those particular trades, how RSI and DMI are impacting them.
Now, I want to go back to RSI that we started with last week. And I want to copy over a summary of the principles that we talked about then. And so a couple of points, let' s just talk about this. All right. What is significant for bullish? What' s significant for bearish? And let me maybe just bold that so you can see it a little bit better. We have an oversold area at 70. And you can see it right here. Take that back. That Is the overbought area. Means buyers are in control. We have an oversold area, which is down here, 30 and below. And so if something has been, say, in the upper area, and it crosses down below the 70, that' s when somebody might consider being a little bit more, more cautionary on their bullish positions, maybe adjusting stop losses.
They might not necessarily do something just because it' s crossed below 70. They might say, well, let' s see if it gets below 50. That' s going to go into a new principle we' re going to talk about today. Same thing here when it' s been below 30 and it crosses above 30. Some traders will take that as a bullish signal. Some traders might say, ' I want to see if it gets above 50.' If it gets above 50, then they might consider, or putting on a new position when they are using the RSI, either in their roles or just maybe consulting with it. So you need to know those boundaries. One of the things that RSI is really good at, that a lot of traders like to use it for, is for identifying divergences.
What' s a divergence? When something is in the price action is going higher, but it' s not in the RSI. So we' re going to go to the SPX for a moment here. SPX has been very strong. Two days ago, it put in another all-time high on the SPX. You can see in here, I drew a flagpole. And to me, it looks like it' s consolidating into a flag. Now, one thing that' s kind of interesting here is we were starting to see a divergence on SPX during this period of time where it was making higher highs. And again, through here, it made a higher high. We would expect the RSI. It put in a higher high, and it didn' t. So here' s our high point here on the RSI.
Actually, we have it here. It did go slightly higher here, so that' s OK. And then we look at the next high is right here. Man, that' s lower. Where is the next high? Well, this actually goes a little bit higher in the price. But that RSI, let' See if it went higher. Through here was a little bit of a divergence. This value is 63. 5. This one is 65. So now we' re seeing the consistency back. So during this period of time when there was a small, there was a divergence. It didn' t occur for very long, but there was one. Some people might use that as a yellow flag: ' Hey, pay attention. Maybe some weakness is starting to show up.' But many people will wait for price to confirm that weakness.
In this case, SPX, the RSI starts to go higher. It started making a higher high. So it kind of got back in sync with what price was doing. It' s helpful to use that boundary identifying a divergence on indexes. You can use it on individual stocks if you want. You can use it on future symbols. You can use it regardless. So, what I wanted to copy over here are what we look for as potential entries. OK. We can look for a divergence. Again, some people just use that as a yellow flag. Wait for price confirmation. It can break the trend line just like it did in our, let' s see, it was on a Keurig Dr. Pepper where it broke through the resistance, that diagonal resistance of the RSI.
Some people might use that. And then we talked about failure swings. What' s a failure swing? It means that the oscillators are not doing something we expect it to do. Now, on Keurig here, I want you to come down to this day where they have announced their earnings. We had an RSI in the overbought area, had a value. That value is 79. 64. We would expect the next peak, or on that next peak, we would expect it to be higher. If the RSI is not higher, if it' s actually lower, then we call it. We call it a failure swing. So here, it went on this big move with earnings, hit a high up here. So the RSI, we can see, was at, let' s see, 79. 64.
And then we' re going to come along here. And we' ll say, well, did it create a higher RSI value? No. Did it create another higher RSI value? No, it didn' t. So at this point, we would say, actually, both of those points are failure swings because it didn' t create a higher high above 70. And it' s the same thing about creating lower lows on the downside below 30. Now we' re going to add a new variable, how to use RSI, that can be really helpful. It is what we call ranges. So I' m going to copy here what the range is for bearish environments and for bullish environments. And let me bold this. And let me. Let' s see. I must have missed something on my copy. I did.
Let me copy one other thing, the full range here. There we go. When stocks, indexes are trending more bullishly, we' re going to see highs in the RSI. We' re going to see those highs in the 80s to 90s. And we' re going to see the lows. We' re going to see the lows in the 40s to 50s. I don' t know why this doesn' t want to bold for me, but yeah, I' ll just leave it alone. Hopefully, you can see that good enough. When it' s in a bearish range, the highs are lower and the lows are lower. So if it' s in a bearish range, 55 to 65 is the high. And the lows. typically, you' re in a range of 20 to 30.
OK, so they' re typically in that oversold area. All right, let' s try this here. All right, so we see our highs 55 to 65, lows 20 to 30. Now, if we go back to SPX here, let' s see if it' s been trading in a bullish range or bearish range. OK, on our SPX, let' s kind of see what these highs have been here recently. So we had a high, 69. Another high at 69 and change. This high here is at 63. This high here is at 65. So you say, well, is that more in line with the bullish range or the bearish range? Well, the highs are not getting into the 80s or 90s, so it might be a little bit weak. But it really isn' t in this range here.
55 to 65 is a little bit higher than that, right? It was 69, 69, 65 here. So it' s not going to be that high. It wasn' t quite as far in the bullish range as we might desire, but it really isn' t in this range here. That that low either to be in a bearish range, right? The lows here, this low is 51. This low here is 59. So 59, 51. They' re not down in the 20s and 30s. So you' d probably look at that and say, it' s not in a bearish range at all, but maybe it' s weakening. OK. Let' s look at something that we know is already weak, right? We' re going to look at the Russell 2000.
Now, in the Russell 2000, it' s had kind of a tough time this year. Let' s start out here on a nine-month chart. On this nine-month chart, I' m going to actually get rid of our DMI as well here, because we' re not using it for any purpose right now. So as we see the Russell 2000, when it starts to go down, it' s going to be better than it was in the last year. So it started having some uptrend, finally. Then the peaks and the troughs started to move to a higher range, OK? This number is 61. That' s more gettiness to a bullish range, but not super high yet. We' ve got 61, 63, 61 again, 63. OK. So it was still in a bearish range.
Interestingly enough, the high point range did get into the bullish range, but it took a while for the index to really catch up there. The lows, okay, when it came down and it started putting in this low, sometimes people wonder, well, is it as strong of a pullback or not? You know, let' s look at what these low points were here. Okay, so there it' s above a support area, but then the next low is at 43. This low down here is at 32. So finally, it started to get into the lower ranges. So that' s another way that you can use RSI, again, with an index or a stock, whatever you want to use it on, okay, to determine, hey, is it trading a bullish range or bearish range?
Okay, let' s go to the next step here. We' re going to put in some new trades here. We' re going to consult the RSI on these trades, okay? Are we going to have it as part of our rules? Somebody could. You don' t have to, okay? But let' s look at our first example here. We' I' m going to go to first solar. First Solar. First Solar is on my list here. And let' s maybe just take that back to a three-month chart. See what' s going on with it here. So as far as the price goes, you can see nice popping action, a flagpole, right? That straight vertical move up. And then it has some consolidation. Now, it' s nice if the consolidation doesn' t last a long period of time.
You know, five, three to five days is ideal. Sometimes it stretches to eight days. This one actually looks like, when I counted, it was 10 days. So some people might be going, ' it' s going on a little bit.' Why? You know, a while. We won' t have the luxury of that. I want it to go on much longer than that. But sometimes we don' t get perfection, right? The price pattern doesn' t necessarily match up with whatever is ideal. So we kind of look for that. The one thing here with this flag is that it didn' t retrace very far down the flagpole. Okay? And that' s what we want to see. We just want to see a little bit of a pullback.
If it goes down more than two-thirds to three-quarters of the way back down the flagpole, then we' re going to say, oh, that' s not a good flag breakout. We want it to stay up and nice and high in this area. Okay? What do we have today? Breakout of the flag. Okay? Now, some people. We' ll use that as a bullish entry signal. We' ll think. RSI. Let' s look at RSI here. The high point here on the RSI is 88. Is that in a bullish or bearish range? Definitely in a bullish range. Okay? Price was pulling back. And so it' s not uncommon to see RSI be a little bit lower as well in that little pullback.
Now, what' s interesting here is it came down pretty close to the 70 and is bouncing up off of that today. All right? So indicators, are they strong? Yeah, they are, technically, quite bullish. Now, when we see a flag, and I' m just going to kind of collapse these zones a little bit here, we can take the height of the flagpole to approximate what we could possibly use as a target. Okay? So I' m going to duplicate the drawing. I' m going to grab it. And you could put it in one of two places. For a more conservative target, you could put it down here. Here at the line of where you see the bottom part of the flag. Okay? That would be more conservative if you wanted to.
You could put it where you see the breakout. That will give us a little bit more of an aggressive target. Now, for our purposes today, I' m actually going to put it back down here at the bottom of the flag range. Give us a little bit more of a conservative look there. And that looks like it ends at 351. So the target based on that is 351. Now, I' m going to write that in here, that that is the target, if you wanted to use it, for a target trait. Let me come back. Let me check your questions out here in the chat.
I think this just might be some commentary. Sim says it could be a flag or a head forming after a shoulder. I think maybe that was on SPX. When you maybe had mentioned that, Sim. Okay. I think we' re in good shape here. I think we just have some commentary going on. All right. So let' s go ahead. Let' s put in our first trade using the RSI. Kind of consulting of it. When you have a price pattern, like say a flag or flag breakout or triangle breakout, typically there' s. You don' t consult with anything else. You don' t consult with an oscillator. You don' t consult necessarily with a moving average. You' re just basing it on price only. Okay. Could you consult the RSI?
You could, but really people using patterns are just going to focus on the pattern. Okay. So we' re going to have our target there at 351. Where would we put a stop? Well, we' d want to stop. If it breaks down into this area, in the flag consolidation area, yeah, we want to have our stop in there. So I' m looking at this and I' m seeing about, where did I put it? About 261 is what I was looking at earlier today. So I had put down 261 as our stop price. $261. 84. That' s going to be our stop. Now. We can position size, which we typically do in our class. We don' t want to buy more shares than what we could.
And what I did is I took the difference between what our stop price would be. Let me mark that as a stop and the current price of the stock. So let' s use our calculator for just a moment. And we' ll say $293. 04 minus the stop $261. 84. Okay. That means we' re taking on risk of $31. 20. Now, some of you might go, ' That' s a little uncomfortable.' You know, and it might be to some of you. This is an incredibly big target. And what somebody might do after the initial entry, maybe say the stock continues tomorrow, then they might consider moving their stop loss up a little bit below, say whatever tomorrow' s low is.
Or they could go a day back if they wanted to, right, which would be a little bit lower than this low. But for the flag itself, we' re just going to put it back down near the bottom of the range for our initial. Okay. So we' re going to position size based on that. We' re willing to risk $750 in our paper money account here, example account. So we' re going to take 750, divide that by 31. 20, which is our risk per trade. That says, hey, you could do 24 shares. Okay. So we' re going to do 21. We' re going to put in this target as our initial positions here. Right mouse click. We' re going to say buy custom with OCO bracket.
So we can put in the target and the stop. We' re going to change our shares here to 24. Click and link those up together. And then this first one is intended to be your target. You' re going to see that it' s a little limit price. And so, yeah, we' re going to stick our higher price in there. We' re going to stick in 351. And that' s just a little bit shy of the top of that. Maybe because it' s so aggressive, you might say, well, I m going to go down to 350 or 349. Absolutely. You would make whatever adjustments that you' re comfortable with for the example trade. We' re going to make both of these good till canceled. And this second one is really intended to be your stop loss.
So we' re going to put in there 261 . 84. That' s our stop. We' re making both. Both of these good till canceled. Remember on the stop, it' ll trigger that market order. And market orders aren' t guaranteed a particular price. The idea is to get out quickly if the stock goes to this low price, 261 . 84 or lower. All right. We' re going to hit our confirm and send. It' s reminding us there. So not a price guarantee on the market order. And we' re going to submit this. And it looks like we got filled right now. A little bit better than what we put it in for, which is nice. Kind of gives you a happy feeling when it does that. All right.
Let me see if there are any others. Questions here. How do you get a hold of our notes? I am not allowed to really post any of my notes. Okay. So you just want to. You' re free to take off a note you want. Okay. So you would want to put in the target, the stop, you know, whatever pertinent examples there are there. Like if you' re trading. If you' Re trading along in your paper money account, these example trades. Okay. So go ahead. Make as many notes as you want regarding this RSI. I' ll also put a link into it last week when we started this discussion. I' ll put a link in the notes to that webcast so that that might be an easier or an easy way for you to find it or go to the archives.
Now, if you' re subscribed to our channel, getting through the archives is really pretty slick. Okay, if you subscribe to our Trader Talks and you can just go down, if you haven' t done this yet, click on that blue YouTube logo down in your bottom right corner, you click on it, that' If you subscribe you to our channel, it makes it easy for you to find our information, find what' s going on. If you' re working off a playlist, right, getting started with technical analysis, you could go find that playlist and go through it if that' s what your purpose was. Some of you are looking for more. Some of you are looking for more recent classes.
And so we' ll be posting some of those recent classes and you' ll also see what' s coming up next, which after we finish our getting started with technical analysis, we' ll be exploring thinkorswim. Brent will be up next with that webcast. Okay. So it makes it easier to kind of find what you' re looking for specifically if you' Re subscribed to our Trader Talks channel. Okay. Just want to point that out. Okay. One other thing. Let' s see here. There was another question I think I need to address. Since there' s a quick way to have those things available in the video' s description, it also helps with discoverability. Yeah, the links I absolutely can put in the comments. Okay. I can put that in the notes for our show.
But notes along with the trades, we couldn' t. Let me check. You know, I' ll check with, I' ll check and see if I can post something similar to what I put in my notes on the side. Depends on what the data is. But typically, they want you to be able to just make your own notes in the way that you understand. Okay. But I will leave those notes up in the scratch pad so that you can see what I' ve written there. Okay. A summary of these principles. All right. See if there' s anything else. All right. Thank you, Lee, for posting the playlist in there as well. That' s our class playlist. Okay. Next up. Let' s collapse our calculator. Let' s come to my watch list here.
And next one on the watch list that I just can' t ignore today is Apple. Okay. Okay. Apple. We had some news last night that they were going to partner with a company called OpenAI, which is a privately held company, for their artificial intelligence. And if you remember earlier in the year, I think maybe even kind of in this area where it was going kind of flat, it was like everybody was announcing their partnership with their AI partner and what they were doing and there was all this buzz about it. Well, that' s why people are in the market looking at it, you know, that maybe today it has almost twice its regular daily volume. And you can see big strong candle here. Now, today the stock is up almost 6.
5%. There may be some of you that are like, ' eh', 6. 5%, I don' t know. Maybe I' m, you know, chasing it at this point. So one way that you could look at it, and this is how kind of I did some math on it earlier. This is an all-time high with the split adjustments in. Okay. About four or five years ago, there was a four-for-one stock split. Back in 2014, there was a seven-for-one stock split. Okay. So split- adjusted, this is a new all-time high. But we could look here and we could say, well, okay, that could be some short-term resistance there. And boom, today it broke through it. If we want to consult with the RSI, we' d say, oh, look at that move.
It crossed. It' s above the 70. And when it was low, it only went to 60. Okay. So we might look at that and say, okay, we I' m going to consult with the RSI. It' s saying things are bullish. This area here, 197. 11. You know, that' s kind of where I would see maybe the short-term resistance being. And somebody, this is going to be a little bit subjective where you would see or feel comfortable that it really is breaking out. You know, if it' s really close to the resistance line, ah, you' re not so sure, right? But if it moves a decent way up, and for simplicity, let' s say $200. Let' s say you feel comfortable at $200, which is near where my mouse is, that it' s broken resistance.
Okay. Let' s see how far past resistance it is then. And see if, you know, as we know, it' s going to be something less than 6. 48. But let' s go 200 minus 205. 70. So that' s going to be $5. 70. Okay. Okay. Let' s divide that by our $200. Okay. The breakout point. Let' s see how much it' s beyond that point now. Okay. So it' s about 2. 85. So not quite 3% beyond that breakout zone. So some people might consider saying, well, maybe I' m not chasing it so far. Some people might say, you know, sometimes in these big candles, there' s a little bit of a pullback. And so somebody might look for a pullback there.
The midpoint of a large candle, like what we' Re- seeing here, many times, not always, but many times will act as support as well. So if somebody was feeling a little bit uncomfortable, maybe they were chasing it at this point, they could look for it to maybe retest the midpoint. They could look for it to come and retest here. There are no guarantees that it' s going to go there. Right? But if, you know, you could have that approach. Technical analysis, you can kind of determine. Determine your comfort level, depending on what you' ve analyzed, what you see on the chart for our purposes today, we' re going to go ahead and we' re going to say, all right, our stop position on Apple is going to be.
Oh, I might not have calculated that yet on Apple. Let’s use the 19711 area. Against if you wanted to say, hey, I think this thing is continuing up. If it doesn' t, I want to stop myself out of the midpoint. Somebody could do that. Let' s go a little bit below the 19711, our breakout zone. And let’s just go. Because it’s such a big candle, let’s just go 1% below it. Okay, so 19711 times . 99 is going to put us at a stop at around 195. All right. If somebody. If somebody wanted to, they could use this as a target trade, or they could just say, kind of trend trade this and just put the stop loss in. That’s what we’re going to do on this.
This one does not have a target, but we are going to put in that stop on Apple at 195. Well, 19513. I should put the change in there. All right, let' s do it. Our Apple up. And let' s do right mouse click by custom with a stop so we can get that set up from the beginning. Oh, I didn' t do my shares. Okay, we got to do the number of shares. So 19513. Got a couple of extra numbers there. Minus the current price, 205. 72 gives us about $10,059 of risk per share. So we' re going to do that. We clear that out and say 750 divided by $10,059. We shouldn' t do more than 70 shares in this account.
Okay, so we' re going to do 70 shares here. Take our 100. We' re going to change that to a seven. Give it our 70. We' ve got our current price, and then we' re just going to put our stop loss price in here. We' re going to put in 195. 195. 0. 13. Okay, it' s about $10 away. Make sure I type that in right. I didn' t. So let' s get the number in there, right? 105. Oh, I did this. Let me try it one more time. I think I' ve got a fat finger here. Okay, it should be stop at 195. 13. There we go. Good till canceled. Triggers the market order. So we know. We know the price isn' t guaranteed. We' re just hoping to get out, get quickly filled if it goes to this price or lower. At that point, it would be breaking that support area that really is quite a waste down. All right, let' s go ahead. Let' s put our confirm and send. We' re going to send this off as well. Now, let me take a look. Let' s wrap up on any questions that you guys might have here. Okay.
Okay, Sim, it looks like some of you guys are helping out there, which I' d love to see. Yeah, Trisha says Elon must be extremely mad at this chart. I don' t know. Got to rant, I guess, right? All right. I think we have captured the questions in here. Do you have anything further? Feel free to chat it in. I don' t want you to answer it. Or Lee, who' s helping me out, would want to help you with it. Okay. So just kind of our summary rules here. RSI can help us with spotting a divergence, right? That it' s not following along what price is doing. We can use it and see if there is a failure swing, right?
If it bounces or if it' s above 70 and doesn' t go higher on the RSI rating, or if it' s below 30 and the next move, it doesn' t go lower. Those are both failure swings. Then we can also look for, a trendline break in the RSI that corresponds with a price break above. Okay. So it can be kind of used that way. And then we introduced you today to using ranges for whether they' re bullish or bearish. Okay. And those would be the ranges we guys, we accomplished quite a bit here today. I' m happy about that. We' re really focused on the RSI. Just summarize the principles there. We have two new trades. An Apple trade and, what was the first trade that we did for solar?
A nice big flag that we saw there. Really, that was our focus was on the RSI. Of course, we did some trades as well. All right. Now coming up next, as I mentioned, will be Brent Moores with Exploring Thinkorswim. So those of you that maybe have a good grasp of Thinkorswim, want to get in a little bit deeper, that' s where the Exploring Thinkorswim comes in. It' s an intermediate level class. And we' re going to talk a little bit about that. And Brent does just a fabulous job with that class. All right, you guys, it' s time to turn you loose. Brent will start here at the top of the hour. I' m just going to look real quick here for any little questions. Just as a reminder, if you haven' t subscribed, you' ll want to do that. So it makes it easier to find our webcasts. All right. We' ll check back with you soon. Bye-bye.
