There’s a simple technical reality most traders overlook — a stock can be bullish and still be a terrible entry point. In a market that’s been stuck in a wide-range chop, this matters even more because momentum is inconsistent and breakouts often fail faster than usual.
I was running through some candidates recently, and this concept kept coming up. Take Anheuser-Busch (BUD) as a perfect example. The chart looked bullish, everything was lining up nicely, but it had broken out recently and was sitting far from its moving averages.
That distance alone made it a pass for me.
It does not matter how good the trend looks if you’re chasing price away from key technical anchors. You’re setting yourself up for poor risk-reward and limited room for structure. When the market is choppy, respecting those anchors becomes even more important because price snaps back aggressively.
Trading is ultimately about knowing when the structure gives you a favorable moment to get a trade going. That’s always been at the heart of how I operate — waiting for the market to offer timing, not forcing it.
Using the 200-Day as Resistance
Moving averages are not just trend indicators — they’re decision points. When I was looking at Kraft Heinz (KHC), the setup was completely different from BUD.
The stock was bouncing up, but I could see it would probably bounce back down off the 200-day moving average. That MA200 level becomes natural resistance, and instead of trying to play a choppy range, I would rather take clear directional positioning to the downside.
But technical clarity is not enough on its own. Liquidity matters. I’ve passed on plenty of otherwise clean setups simply because the options market was not liquid enough. If spreads are too wide or contracts aren’t trading with enough volume, it undermines execution and destroys the risk-reward dynamics you’re trying to capture.
This is why every trade has to balance structure, technicals and real-world fill quality. Strong analysis means nothing if you cannot enter or exit efficiently.
Wedges, Horizontal Levels and Risk-Reward Discipline
When I analyze structure, I’m looking for patterns that tell me where to place my strikes and how to build my option structures. HSBC Holdings (HSBC) had a very clear bullish trend with a wedge forming at the top.
That wedge meant I wanted a structure unbound to the upside — no reason to cap gains when the technical setup suggests continued strength. I drew a horizontal level at $95 that matched with a lot of the highs the stock had made.
Those levels become anchor points for strike placement.
The same methodology applied to Freeport-McMoRan (FCX), though with the added volatility metals typically bring. I wanted my break-even near a level like $59, where the structure had room to work.
That’s part of maintaining a disciplined risk-reward ratio — something I am constantly adjusting for. If the math does not justify the trade, I do not take it, no matter how clean the chart looks.
For newer traders, it helps to understand the specific structures I often reference. Iron condors and butterflies, for example, are ideal in environments where you want defined risk and controlled exposure.
Their effectiveness depends on the same technical factors I have been outlining — distance from moving averages, trend clarity, liquidity and the ability to engineer a favorable reward-risk profile. These strategies help you express a view with precision instead of guessing.
In every case, the chart tells you everything you need — you just need the discipline to listen, the patience to wait for timing and the awareness to avoid trades where liquidity or reward-risk undermines the setup.
Kane Shieh
Kane Shieh Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
