How to Exit Stocks at Correct Technical Level - Candlestick Patterns Explained by TechniTrader®

Identify Resistance Where Professional Traders Would Start Taking Profits

Most of the time, Retail Traders are focused on finding stocks to trade. However, they spend scant time on assessing risk, proper stop loss placement, trailing profit stops, and determining when to exit the trade, especially as a stock goes ballistic.

See chart example #1 below, which is a pricey stock that many Retail Traders would choose to trade as an Option.

The compression entry candlestick pattern with the “buy into strength” signal and the stock order type positioned either as a stock buy or option premium trade buy to open the order. All indicators confirmed the presence of Dark Pools and Professional Traders, as well as the predatory and opportunist Deep Pockets at the time.

Then, the entry triggered as the stock moved into the preset order for “buy into strength” and set the trade up for a very low-risk entry with a high profit potential. The Weekly Chart View is used to identify resistance areas where the technically proficient Professional Traders would start taking profits. Based on those levels, the target gain potential is set, and sell levels are determined before the stock moves, which is the starting point of how to exit a stock at the correct technical level. See chart example #2 below.

The following is a list of the Resistance Levels to overcome in order to reach the Correct Technical Exit Level:

There is a bottom completion level which the stock has moved above and sustained around $170. This offers support for an initial stop loss.
The next resistance is a Monthly High, and due to the momentum of the market, this is calculated as moderate resistance at $196–$200 and thus the appropriate trailing profit stop OR exit can be made as the stock moves into that area.

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Trade Wisely,

Martha Stokes CMT

TechniTrader technical analysis using StockCharts charts, courtesy of StockCharts.com

Chartered Market Technician
Instructor & Developer of TechniTrader Stock & Option Courses