Cycle of Price Action

Model Book
THE CYCLE OF PRICE ACTION
THE FULL CYCLE OF PRICE ACTION
REVERSAL EXTENSION

Look for a defined support level on a higher timeframe.

When price approaches the higher timeframe level, it must be extended

from the 10 EMA on the lower timeframe chart (air between price and the
moving average).

When the stock starts to put in a reversal bar, go long.

Heavy volume capitulation on the reversal bar is a key ingredient in this

setup. Initial stops go below the low of the reversal bar area.

First profit target is the 20 EMA on the trading timeframe.

Stops move to cost when partials are taken with discretion used toexit the
remaining shares.
WEDGE POP - THE MONEY PATTERN

Price trades in a tight range as it works lower.

Often for longs, the stock is showing relative strength to the underlying index.

The 10/20 EMA should be tightening, showing a lack of overall momentum

despite being “dragged” in the direction of the underlying market.

When price recaptures the tight 10/20 EMA, go long with a stop below the
near-term price consolidation.

Ride the EMAs as a trailing stop once the trade triggers.

EMA CROSSBACK

Price has already recaptured the 10/20 EMA on the chart to be a

candidate.

It then pulls back into the 10/20 EMA for the first time.

Buy the stock against the 10/20 EMA.

Stops are placed below the moving averages.

Raise stops in a trailing format with the 10/20 EMA.

BASE N’ BREAK

Price will build a basing pattern finding support at the 10/20 EMA.

This is often a slightly longer consolidation rather than a short 1–3 day pullback.

Buy against the moving averages with confirmation adds on the base
breakout.

Stops are placed at a loss of the moving averages.

Ride the moving averages higher while selling into pops away from the 10 EMA
moving average with final stops at a loss of the EMAs.
EXHAUSTION EXTENSION

This is blowoff/euphoria and a sign the market may be topping.

The further you get into an uptrend and the more extensions you get away from
the 10EMA the more likely a stock is to re-base.

The second extension from the 10EMA is generally a good place to take profits.

If you get a third extension you are often getting late in the intermediate term
trend.
WEDGE DROP

This is the first time the market drops down across the moving
averages after an Exhaustion Extension.

The Inverse of the Wedge Pop

EMA CROSSBACK

Now we’re back to a crossback, but this time we’re in a down

trend and rallying up into the moving averages.

Often shorter duration than during the up-cycle

BASE N’ BREAK

A Longer consolidation during the down cycle.

These are ofter shorter and there may be less than during
uptrends
Will the patterns always be present, never skipped and follow that perfect set of steps?

No. That is not the point. This a framework to think about price.

These steps are simply a guide to keep us out of trouble, on the right side of the market, prevent chasing, and help make
disciplined risk/reward decisions.

The goal is to combine multiple different timeframes so you can capture a higher timeframe trend while defining your risk with a
lower timeframe entry.
FULL CYCLE EXAMPLES
 NVDA Oct 21

Wedge Pop

EMA Cross Back

Reversal Extension
 NVDA Oct 21

Exhaustion Extension
Base n Break
Lower High
EMA Cross Back

Wedge Drop

Base n Break
Wedge Pop
 UPST Nov 2023

Lower High

Base n Break

Wedge Drop

Wedge Pop

EMA Cross Back

Reversal Extension
 AFRM Nov 2023

EMA Cross Back

Base n Break Wedge Drop

Wedge Pop

EMA Cross Back

 ELF Weekly 2022-2024

Base n Break Lower High

Base n Break

Base n Break

Base n Break Wedge Drop

Wedge Pop

Base n Break

Wedge Pop

EMA Cross Back

 TSLA 2019-2020

Exhaustion Extension
Lower High

EMA Cross Back

Base n Break

Wedge Drop

Base n Break
Base n Break

Wedge Pop

EMA Cross Back

 TSLA 2019-2020

Base n Break

Wedge Pop

EMA Cross Back

Reversal Extension
 TSLA 2019-2020

Exhaustion Extension
Wedge Pop

Base n Break

Wedge Drop

Base n Break

Base n Break
 TSLA 2019-2020

EMA Cross Back

Wedge Drop

Base n Break

Wedge Pop
 NET 2021

Base n Break

Base n Break

Wedge Drop

Wedge Pop

EMA Cross Back

 NIO 2023

EMA Cross Back

Base n Break

Base n Break

Wedge Drop

Wedge Pop

Base n Break

EMA Cross Back

 MARA 2023

Exhaustion Extension Lower High

EMA Cross Back

Base n Break

Wedge Drop
Base n Break

Wedge Pop

EMA Cross Back

 AFRM 2023

EMA Cross Back

Base n Break

Wedge Drop
Base n Break

Wedge Pop

EMA Cross Back

 UBER 2023

Wedge Pop Wedge Pop

Base n Break

Base n Break

Wedge Drop Wedge Drop

Reversal Extension
Wedge Pop
EMA Cross Back
 UBER 2023

Wedge Pop Wedge Pop

Base n Break

Base n Break

Wedge Drop Wedge Drop

Reversal Extension
Wedge Pop
EMA Cross Back
REVERSAL EXTENSION EXAMPLES
SQ Reversal Extension

Reversal Extension
NOW Reversal Extension

Reversal Extension
TSLA Reversal Extension

Reversal Extension
ROKU Reversal Extension

Reversal Extension
V Reversal Extension

Reversal Extension
TWLO Reversal Extension

Reversal Extension
ENPH Reversal Extension

Reversal Extension
PTON Reversal Extension

Reversal Extension
NFLX Reversal Extension

Reversal Extension
 NIO Reversal Extension

Reversal Extension
Wedge Pop Examples
NVDA Wedge Pop

Wedge Pop
NVDA Wedge Pop

Wedge Pop
NVDA Wedge Pop

Wedge Pop
AMD Wedge Pop

Wedge Pop
SEDG Wedge Pop

Wedge Pop
SHOP Wedge Pop

Wedge Pop
EMA Crossback & Base n Break Examples
BLDR Crossback + Base n Break

Base n Break

EMA Cross Back

AFRM Crossback + Base n Break

Base n Break

EMA Cross Back

PATH Crossback + Base n Break

Base n Break

EMA Cross Back

ABNB Crossback + Base n Break

Base n Break

EMA Cross Back

 NVDA Crossback + Base n Break

Base n Break
Base n Break
Base n Break
Base n Break

Wedge Pop

EMA Cross Back

CAMT Crossback + Base n Break

Base n Break

Base n Break

Wedge Pop

EMA Cross Back

BLDR Crossback + Base n Break

Base n Break

Base n Break
Wedge Drop

Wedge Pop

EMA Cross Back

 ZS Crossback + Base n Break

Base n Break

Base n Break

Base n Break
Base n Break

Wedge Pop

EMA Cross Back

 TWST Crossback + Base n Break

Base n Break

Base n Break

Wedge Pop

EMA Cross Back

Exhaustion Extension Examples
ETSY Exhaustion Extension (Weekly)
2nd Extension

1st Extension
AI Exhaustion Extension (Weekly)
3rd Extension

2nd Extension

1st Extension
ABNB Exhaustion Extension

Exhaustion Extension
Wedge Drop Examples
UPST Wedge Drop

Wedge Drop
QQQ Wedge Drop

Wedge Drop
NET Wedge Drop

Wedge Drop
NET Wedge Drop

Wedge Drop
NVDA Wedge Drop

Wedge Drop
QQQ Wedge Drop

Wedge Drop
QQQ Wedge Drop

Wedge Drop
SHOP Wedge Drop

Wedge Drop
TDOC Wedge Drop

Wedge Drop
SQ Wedge Drop

Wedge Drop
EMA Crossback and Base n Break
Examples
 NFLX

Lower High

EMA Cross Back

Wedge Drop

Base n Break
ZIM

Lower High

EMA Cross Back

Wedge Drop

Base n Break
 ZM

Lower High

EMA Cross Back

Wedge Drop

Base n Break
 TDOC

Lower High

EMA Cross Back

Wedge Drop

Base n Break
Base n Break
 QQQ

Lower High

EMA Cross Back

Wedge Drop

Base n Break

Base n Break
 PYPL

Lower High
EMA Cross Back

Wedge Drop

Base n Break

Base n Break
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