Technically Sound

Traders this stock is technically sound and ready to go. In this edition of The Brown Report I want to you to understand how different technicals, different charts, and different time frames can help you frame your analysis. Here’s how to use a “a base, volatility squeeze, break out, pull back and flag pattern”

Here we’re looking at Devon Energy “DVN.” First things first, Devon Energy has formed a base (i.e. traded sideways) since mid October (that’s a good 6 months). The stock came into a volatility squeeze and then broke out forming the “Flag Pole” as noted on the chart.

From the break out the stock has pulled back to roughly the middle of the price range from when it initially broke out forming the “Flag” blowing in the wind. This is also known as a retracement. It is not uncommon for stocks to have a 50% retracement (to the middle of the original break out) before resuming its uptrend.

In this second Chart of the same stock I chose to zoom out to a weekly view. With no annotations on the chart, I wanted you to be able to see where the stock came from (roughly the $93 range), so you can have an idea of where it could possibly return to.

here’s some homework, see if you can spot on the weekly chart the flag pole, the flag, and the uptrend resuming.

-Side note when a stock has the same setup on the weekly chart as it does on the daily chart, that is a strong pattern and usually means your right on time to the party-

Happy trading!

Comments are closed.