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Leg Up or Leg Down Explained- Video and Transcript

Turbo Trading's Head Trader Robert Knight, MBA explains what a leg up or leg down pattern is and how to recognize it in a chart. He uses stock $SAVA and $OCGN from November 2, 2021, to demonstrate these patterns. A transcript is below the video.

Okay, this is a quick video on the term leg up or leg down. One of the members asked me a question because I had written in the chat room to ‘watch $SAVA this is the next leg up.’ And what you find when stocks are trading up or down in a channel, is that they'll make higher highs and higher lows

So to get into a big channel, and it's the channel trading, that's very important for us. That's where we make all our money. But what it means is if I say this is making the next leg up or the next leg go, and I'll show you the examples of both. So we see $SAVA here has a big pop and it double tops up here and then pulls back.

Now, typically when you have, a move up, you always hear me talk about a five-wave move up and or three-wave corrective to the downside, or if it's a five-wave move down and then a three-way move corrective to the upside. So this is what I call a leg up. This is a pullback. And then I said, watch for $SAVA to make the next leg up.

And this here popped, this is the next leg up. Now it didn't run that far. And the reason for that is because it's running into a lot of resistance here. It's running into the 50 period moving average and this declining tops line, and it's already up $8 on the day. So it might run into some trouble, but here's the- 1, 2, 3, 4- you could look for one more leg up. Fifth leg up, maybe takes it to, you know, $57, $58.

Now on the flip side to that, big leg down. This was the $OCGN which first thing this morning got into a nice rising channel. And then boom got whacked. And at some point the shorts wanted cover. And the dip buyers want to come in. So this is your first leg down. One. It does pop up.

Here's your next leg down to now. Two. It did pop up. It made it, this made a V bottom right-hand extension pattern. So we didn't get a fifth leg down here, or a third leg down. We just got a -1, 2, 3, 4- and then a fifth-wave consolidation here, now moving back up. But whenever I say, this is a leg down or up, so you get this big surge down pops, next leg down, drops, and then a bit of a pop back up.

And in this case, it did hold support. And this continued to go. There was one other one I was looking at that was good. This $BBLG here. It was very strong in the pre-market and then boom, you can see it made this -1, 2, 3, 4, 5- wave moved down. Three wave corrective back to the upside.

Or you could almost look, this is -1, 2, 3, 4, 5- wave move back up. And then -1, 2, 3, 4- and then fifth wave consolidation drifting off. But these are your big leg-down patterns.


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