LIGHTER - Trading Setup Case Study and Price TargetsHey, everybody. This is Brett. We're going to do a case study here on Lighter.
Lighter has had quite a run here, coming back since May, down here around a dollar all the way up to $3 there. So if we put the date and price range up, it's about 275% up, which is pretty good.
A couple of things here we're going to kind of unpack at the same time.
Originally, we were watching this and watching a bull flag pattern, and so the bull flag is where you have a flag pole, is the terminology, and then a pullback.
So the measured move on this is the breakout above the flag pole.
Generally, you'll see a breakout and a retest or some consolidation, and then ultimately, it will often resolve to the upside the same distance as the flag pole.
Normally, we want to see it follow that and not extend to the side, but this is fine.
And so we'll talk about why there's confluence at all of these different levels here.
So I'm just going to layer these on, and these were the original price targets that we had, and then I started to layer in a Fibonacci retracement projection.
So we draw that by going to the swing high. I use candle tops sometimes in the top and then the bottom. You can fudge it a little bit.
I've gone from the wick top to the wick bottom in here and then drawn it over to the right-hand side. So we can see that there's confluence here in a couple of areas.
I had originally given a profit target of around $3.25, and the reason for that was this Fibonacci extension, the 1.618.
So what we see here is some confluence then also at the second target, the 2.618 Fibonacci target. That's the measured move, and I was very careful not to fudge this or try to make it work out, and this is why it's a textbook example where there's confluence.
So again, the bull flag measured move right up to this $4 mark, and also the Fibonacci 2.618 also at $4.
So we have confluence there, and I drew the blue zigzag, as usually we'll have some pullback at these levels. We see some profit-taking.
You note that there's sort of a week or so of green candles. So some profit-taking and a pullback down around here would make sense, and we'll talk about that next why exactly that level is what I'm forecasting.
And on the same example, though, I think if the bull market is sustained and we have a strong market, that's no guarantee that we do, but the ultimate target here would be around $4.87.
Kind of depends on if we see another rollover or not.
So a near-term target would be that $4 mark. And so to re-enter Lighter, we'd want to look for a pullback here. And so what we would normally see on this large candle here, and the way you know it's a vector candle is if the top of this candle is the same opening as the next candle, and then it goes all the way up here, and then the next candle pushes higher from there of the real body.
So that's also known as a fair value gap. The market makers are taking the opposite side of that trade and that push higher, but they like to kind of bring it back to the midpoint because as a fair value gap, it is where there's an inequality.
There's the value of the price is getting marked up compared to the fair value. So at any rate, and that's a little bit beyond the scope of this. But we can also see that here at that-- There's a blue line here.
Although that's the text version, the midpoint I've drawn. So we'll see if this comes back. I would put buy limit orders in at $2.90 in there to catch the bounce. It did actually come down on today's wick and came all the way down here.
So it's good that it's holding.
Probably, again, pulls back down. That would be invalidated if we go up above this area and then retest. So that's certainly an option. We could see this push on through and then do this kind of move, but generally, we'd see this kind of pullback. So that's that vector candle midpoint, and so that's another lesson here.
The all-time breakout, by the way, where we were looking for entering this and where I was calling for entry, the ideal point is down here inside of a buy block, and then the next best place is on a breakout of the prior high.
And so we're seeing that, and also we did just come down and retest that, so that's good.
We also want to see price above the 21- and 50-day EMA and have those start turning up. Like here, we were consolidating, we pushed up a little bit, pretty common, and then we come back and retest that 21-day EMA, riding it, and then it popped.
So that was another early signal and why we were actually getting into this, recommending this as early as Monday, I believe, and to take some profits on this, but this has performed very well exactly to that profit target. If we open up our other signals, less conclusive. These don't always line up.
Also, because that 21-day exponential moving average price, I like to see the price pull back and bounce off of this one more time. So that's why this makes such an excellent case study. So we'll put that bull flag back on.
That's a good sign for it to go higher. And then on the longer-term timeframe, though, it's in a nice uptrending channel.
It's been a very nice uptrending channel all the way back since May. So this also points toward more of an upside. So now there's a third study that overlays this. It's also very interesting. And so we'll pull this up.
It's called a cup and handle pattern. And so these are all patterns you should be aware of. I'm going to zoom out for this. Maybe I will just turn these other ones off so it's more clear. The cup and handle is, it's tried and true.
I learned this 25 years ago, and it's still as good as it was then as it is today. I think I drew this on a weekly chart, so it's a little bit off here.
So the measured move on a breakout, this vertical blue line is just the same size as that. So you can go down to your clone button and then just drag it up. So you can see that pushes it right up to around that 4.925 level. And what does that also coincide to?
It coincides with, rather, also our Fibonacci level almost exactly. So very powerful how the confluence here works.
So what I would suggest is just use this 4.87. It might go to $5, but I would say put a sell order in at $4.85. And in that case, if that were to happen, then we would've hit each one of these Fibonacci levels for different reasons.
So the first one was this initial pump to the 1.618. The second target we see here is the, what is that? That's the measured move of the bull flag, right? So that's, I think, more is quite possible and warranted.
And then the third one, the confluence there. So we have double confluence on each fib level that we go higher. So anyway, so that's why it's such a great study when we put all of this together.
Hopefully, this all makes sense, and these are the things we want to watch for when looking for other breakouts. It's rare that we'll get this many together, but I thought this was an excellent case study because it's just a beautiful example of our order block signals and the moving averages and these basic patterns, the cup and handle, the bull flag breakout, simple use of the Fibonacci, and giving us these targets, and also this vector candle midpoint that nobody teaches, really.
This is something I noticed as a pattern and figured out later why it worked.
And so that's been the basis of several of our discoveries. And so let me know your thoughts on this. This is worth studying, and certainly if the markets weaken and we come down lower, some of this will be invalidated, but I would suggest this regardless. Either way, when we're in-- You always want to know your market status, your market conditions.
If this were a bear market rally, I might say, "Hey, look, we should take our profits and wait." But because of this new phase, we just had a great announcement by the SEC announcing regulation is coming, massive surge in the markets, money flowing in, Bitcoin up 10,000, and also we had the announcement that the Fed's going to start doubling its buybacks of the bonds. So the winds of change are behind us.
The headwinds have become tailwinds, and we want to take those times to be a little more aggressive and take these chances and catch these chart patterns because as I say over and over again, show me the charts, I'll tell you the news.
Again, the news broke here on Wednesday. We were buying here on Monday and Tuesday.
Again, I think it's going to pull back here, let the moving averages catch up, bounce off of support, and then we go again, and that's my read on that. So anyway, that's the example. Hopefully, you enjoyed that, and we'll be doing more of these soon.
Let me know what you think.
Apologies for the long-winded transcribed version of a video I made.
Okay. Hey, everybody. This is Brett. We're going to do a case study here on Lighter.
Lighter has had quite a run here, coming back since May, down here around a dollar all the way up to $3 there. So if we put the date and price range up, it's about 275% up, which is pretty good.
A couple of things here we're going to kind of unpack at the same time.
Originally, we were watching this and watching a bull flag pattern, and so the bull flag is where you have a flag pole, is the terminology, and then a pullback.
So the measured move on this is the breakout above the flag pole.
Generally, you'll see a breakout and a retest or some consolidation, and then ultimately, it will often resolve to the upside the same distance as the flag pole.
Normally, we want to see it follow that and not extend to the side, but this is fine.
And so we'll talk about why there's confluence at all of these different levels here.
So I'm just going to layer these on, and these were the original price targets that we had, and then I started to layer in a Fibonacci retracement projection.
So we draw that by going to the swing high. I use candle tops sometimes in the top and then the bottom. You can fudge it a little bit.
I've gone from the wick top to the wick bottom in here and then drawn it over to the right-hand side. So we can see that there's confluence here in a couple of areas.
I had originally given a profit target of around $3.25, and the reason for that was this Fibonacci extension, the 1.618.
So what we see here is some confluence then also at the second target, the 2.618 Fibonacci target. That's the measured move, and I was very careful not to fudge this or try to make it work out, and this is why it's a textbook example where there's confluence.
So again, the bull flag measured move right up to this $4 mark, and also the Fibonacci 2.618 also at $4.
So we have confluence there, and I drew the blue zigzag, as usually we'll have some pullback at these levels. We see some profit-taking.
You note that there's sort of a week or so of green candles. So some profit-taking and a pullback down around here would make sense, and we'll talk about that next why exactly that level is what I'm forecasting.
And on the same example, though, I think if the bull market is sustained and we have a strong market, that's no guarantee that we do, but the ultimate target here would be around $4.87.
Kind of depends on if we see another rollover or not.
So a near-term target would be that $4 mark. And so to re-enter Lighter, we'd want to look for a pullback here. And so what we would normally see on this large candle here, and the way you know it's a vector candle is if the top of this candle is the same opening as the next candle, and then it goes all the way up here, and then the next candle pushes higher from there of the real body.
So that's also known as a fair value gap. The market makers are taking the opposite side of that trade and that push higher, but they like to kind of bring it back to the midpoint because as a fair value gap, it is where there's an inequality.
There's the value of the price is getting marked up compared to the fair value. So at any rate, and that's a little bit beyond the scope of this. But we can also see that here at that-- There's a blue line here.
Although that's the text version, the midpoint I've drawn. So we'll see if this comes back. I would put buy limit orders in at $2.90 in there to catch the bounce. It did actually come down on today's wick and came all the way down here.
So it's good that it's holding.
Probably, again, pulls back down. That would be invalidated if we go up above this area and then retest. So that's certainly an option. We could see this push on through and then do this kind of move, but generally, we'd see this kind of pullback. So that's that vector candle midpoint, and so that's another lesson here.
The all-time breakout, by the way, where we were looking for entering this and where I was calling for entry, the ideal point is down here inside of a buy block, and then the next best place is on a breakout of the prior high.
And so we're seeing that, and also we did just come down and retest that, so that's good.
We also want to see price above the 21- and 50-day EMA and have those start turning up. Like here, we were consolidating, we pushed up a little bit, pretty common, and then we come back and retest that 21-day EMA, riding it, and then it popped.
So that was another early signal and why we were actually getting into this, recommending this as early as Monday, I believe, and to take some profits on this, but this has performed very well exactly to that profit target. If we open up our other signals, less conclusive. These don't always line up.
Also, because that 21-day exponential moving average price, I like to see the price pull back and bounce off of this one more time. So that's why this makes such an excellent case study. So we'll put that bull flag back on.
That's a good sign for it to go higher. And then on the longer-term timeframe, though, it's in a nice uptrending channel.
It's been a very nice uptrending channel all the way back since May. So this also points toward more of an upside. So now there's a third study that overlays this. It's also very interesting. And so we'll pull this up.
It's called a cup and handle pattern. And so these are all patterns you should be aware of. I'm going to zoom out for this. Maybe I will just turn these other ones off so it's more clear. The cup and handle is, it's tried and true.
I learned this 25 years ago, and it's still as good as it was then as it is today. I think I drew this on a weekly chart, so it's a little bit off here.
So the measured move on a breakout, this vertical blue line is just the same size as that. So you can go down to your clone button and then just drag it up. So you can see that pushes it right up to around that 4.925 level. And what does that also coincide to?
It coincides with, rather, also our Fibonacci level almost exactly. So very powerful how the confluence here works.
So what I would suggest is just use this 4.87. It might go to $5, but I would say put a sell order in at $4.85. And in that case, if that were to happen, then we would've hit each one of these Fibonacci levels for different reasons.
So the first one was this initial pump to the 1.618. The second target we see here is the, what is that? That's the measured move of the bull flag, right? So that's, I think, more is quite possible and warranted.
And then the third one, the confluence there. So we have double confluence on each fib level that we go higher. So anyway, so that's why it's such a great study when we put all of this together.
Hopefully, this all makes sense, and these are the things we want to watch for when looking for other breakouts. It's rare that we'll get this many together, but I thought this was an excellent case study because it's just a beautiful example of our order block signals and the moving averages and these basic patterns, the cup and handle, the bull flag breakout, simple use of the Fibonacci, and giving us these targets, and also this vector candle midpoint that nobody teaches, really.
This is something I noticed as a pattern and figured out later why it worked.
And so that's been the basis of several of our discoveries. And so let me know your thoughts on this. This is worth studying, and certainly if the markets weaken and we come down lower, some of this will be invalidated, but I would suggest this regardless. Either way, when we're in-- You always want to know your market status, your market conditions.
If this were a bear market rally, I might say, "Hey, look, we should take our profits and wait." But because of this new phase, we just had a great announcement by the SEC announcing regulation is coming, massive surge in the markets, money flowing in, Bitcoin up 10,000, and also we had the announcement that the Fed's going to start doubling its buybacks of the bonds. So the winds of change are behind us.
The headwinds have become tailwinds, and we want to take those times to be a little more aggressive and take these chances and catch these chart patterns because as I say over and over again, show me the charts, I'll tell you the news.
Again, the news broke here on Wednesday. We were buying here on Monday and Tuesday.
Again, I think it's going to pull back here, let the moving averages catch up, bounce off of support, and then we go again, and that's my read on that. So anyway, that's the example. Hopefully, you enjoyed that, and we'll be doing more of these soon.
Let me know what you think.
Apologies for the long-winded transcribed version of a video I made.
