What is a Textbook Chart?
When we see a formation of chart pattern in real life situations that resembles just like what we study in theory- we call it Textbook chart. Then we make a very basic assumption - Theory says that stock now should behave in this fashion. It is based on this logic that one can formulate a trading plan and hope for repeatability
Example: ABB stock was positioned to make a big bullish move in January 2016
The idea: The stock has made a large candle breakout above 100 dma and hence ready for the move towards 1400-1500 over next few weeks and months.
I covered the stock back then -
Here's how the stock performed -
ABB stock performed exactly the way it was visualized - just like the text book said 🙂
I cover Textbook Charts as the pattern takes shape on weekly basis. Here's this Week's Text Book Charts:
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers