Based on the wide channel movement of $Tesla(TSLA.US), here's a classification of trends in price action:
1. Breakout-type main surge: consecutive large bullish candles, with gaps and no pullbacks. For example, the common consecutive limit-up stocks in A-shares fall into this category, as well as the explosive rallies of Oracle and Google. On the daily chart, it appears as a single large bullish candle, while on smaller timeframes, it resembles the A-share pattern.
2. Narrow channel strong trend: small bearish/bullish candles or large bullish/small bearish candles, with very short pullbacks, generally moving upward along the ema10/20 moving averages. Examples include recent A-share stocks like Taotao Auto and Shenghong Technology, as well as U.S. stocks like Microsoft, NVIDIA, HOOD, and RBLX since Q2.
3. Wide channel weak trend: wide-range oscillating uptrend, reversing or failing to break through at the channel boundaries. Most trends fall into this category, so it's important to accept this common scenario and familiarize yourself with the boundaries without being troubled by fluctuations.
4. No clear trend: the price is in a consolidation range. After two or three failed attempts to break upward or downward, the upper and lower bounds of the range are established. Examples include Intel and Apple in Q2.
Based on the above, choosing right-side trading means buying high and selling higher, while left-side trading means buying low and selling high. I primarily focus on right-side trading for stronger certainty.
In left-side trading, the environment determines everything. During the holding period, consecutive breakout trends often don’t last, and buying power is quickly exhausted, so it's important to exit gradually. For narrow channel trends, use the 20-day moving average as a benchmark and reduce positions only if it's breached. For wide channel trends, use the channel boundaries as limits and consider day trading to lower costs.
For options, if you’re betting on expiration dates, it’s like gambling. A breakout trend can yield big gains. For shorter-term options, sustained narrow channel trends may lead to missed opportunities, while wide channel trends can erode time value. Choosing LEAP options can theoretically avoid the noise and erosion from wide channel trends, making a long-term focus with short-term supplements optimal.
Options sellers must base their strategies on familiar stocks, anticipate possible movements, and test their capital strength and risk control—having funds to buy on dips and stocks to sell on rallies.
