Today we are going to be talking about one of the easiest to understand and execute on trading patterns within the stock market. This is the pattern of over buying and over selling within the same time period. This is a great opportunity because you can buy in at the discount and sell out when it's overbought. and if you can identify stocks that meet this criteria, you can have a pretty easy go at it.

anyways. all I ask for in return for this video is that you hit that beautiful like button. And also if you see value, go ahead and hit that subscribe button for more short, sweet and simplified videos on how to trade the stock Market day. There are two variations of this pattern.

So the first variation is what we just talked about. the stocks that have a recent history of being oversold and overbought during the same time spin. These are known as the comeback kings. The second variation are the ones that are repeatedly below fair value and then recover to overbought.

These are known as the comeback queens. Now, the comeback Kings provide more upward potential than the comeback Queens do, but they both make great positions. Now these are named after the 16th century Royals Who would slaughter villages of peasants, but then bring in new swarms of them by offering them cake? But then the peasants would try to take more cake and the king would call them greedy and then slaughter them again. This would restart the cycle.

Now in our world of trading, the price action is the king slash queen and we are but lowly peasants. So as traders, it's our job to get the cake and get out before we get slaughtered by the king. So to start from the bottom, a stock that displays the comeback King pattern must have at least three points of both over selling and over buying within the same time period. That means that for example, if you're looking to take an intraday position, you're going to want to identify this pattern intraday since your goal in that situation would be to both buy and sell on the same day.

Likewise, if you're taking a swing position, you'll want to adjust to a longer time span based on the market conditions of the day that you're trading or the time period that you're trading. The amounts of kings and queens available for each time span varies, but there are opportunities every single day. You just have to know where to look. Both the king and the Queen both offered various amounts of cake also known as profit, but they will slaughter you if you try to take one extra piece after the stock is marked as overbought.

So before we get into the examples, promise me that you understand that the goal is to take the king and avoid getting killed by the crown. That means getting in before the cake is giving adding cake or profits to your plate as the price increases and then selling out or taking your cake home when it's marked as overbought. If you can do this, you have a much less likely chance of getting slaughtered in the market. Courage you to comment this below because I Always get feedback from folks on this channel saying that one of the best ways they learn the material is by interacting with the content and taking the time to type it out in a comment section is one of the best ways to interact with it.

But anyways, the first practical example of this I'm going to give is with Tesla. So if we are looking into Tesla we'd pull up the chart and check to see if it met the criteria for either a comeback, king or queen. We see that Yes, indeed it does, and we see three periods of both oversold and overbought. That means that we can identify this as being a comeback king.

We could see that every single time it had been oversold within this time period, If we had taken a position and then sold out at overbought, we would have made a profit. In fact, even before this fit the criteria for comeback, King it had a pretty good history of recovering and buying in even at these points, which would have been profitable. But the key here is that in order to effectively trade this pattern, you have to sell out when it's overbought. If it is overbought in the future and the stock price is trending down, then the next overbought price will be lower than the previous one.

But anyways, great. So now that you've identified this as a pattern, you want to also ask yourself if the time duration of the position that you're attempting to take make sense for you. Since comeback kings and comeback queens come in time durations of all different shapes and sizes, you'll want to find opportunities that work best with your trading style. And the reason is because even if you have a high probability of making a good return on a single comeback, king or queen, if it takes a month to realize that goal, you're not going to want to lock up your capital for that amount of time.

Locking up your capital could be missing out on other opportunities within the market. So to figure out the time span at which this position is likely to take to recover back to overbought, you should look to the last several times that recover to take an average of how long they took. The first took about eight to nine days, the next two were about twenty days, and the last one was about fourteen days. So just to give you a feel the average would be about around 14 or 15 or so knowing the average, this particular position would probably take about fifteen days to recover if you bought in the men, and it was oversold.

So now you could use that knowledge and see if that applies to the types of opportunities that you're looking for. If you're looking for four-day positions, this isn't going to work for you. If you're looking for intraday positions, this particular one's not going to work so you can filter that out and then look for the next one that fits your criteria. So let's check out another one be PTH Also fit the criteria for comeback Queen Today, lying in below fair value offered many great opportunities to profit, but this comeback Queen offered a decent amount of price volatility.

For example, in the situation, buying in just below fair value would have netted about $4 of profit per share. So tea RTC is another example of a comeback. Queen During this day, buying in at fair value would have allowed us to exit out at a higher position every single time entry day. of course.

this also had an ascending uptrend pattern which can give the trader more confidence in executing the position. So checking out EMU's chart from yesterday, so we see that the last six times buying in at or below fair value would have allowed us to hold to over bought and netted us a profit as a result. Thus, this is a comeback Queen That being said, this is extremely weak in terms of actual price volatility as there's only like 20 cents on a thirty dollar position, which just doesn't make any sense to trade using this pattern unless you're using a very large account. but that could be, but you could have a volume limitation.

so I Don't think this would be a great place so I'd probably filter this out. Zn GA is another example. This one is really close to fitting the comeback King definition for a day position. It has three overbought points, but it only has two oversold.

But the thing is that there are several points that I got really close to oversold and also really close to overbought. So all this technically isn't they come back. King It still fits the criteria of a comeback Queen since it fell below fair value enough times, but is also stronger than the normal Queen because of the greater than average volatility as compared to most Come Back Queens So Zillow portrays a strong comeback Queen pattern for the last few days as well. We didn't just see the price action dip below fair value, but quite far below it.

And if you count the amount of times it did this, it fits the criteria for the comeback Queen pattern Zillow also fit the criteria for comeback King pattern. In a different time period, we saw the over selling and over buying criteria be met on this timeframe and this would have allowed us to take advantage of it at that time. So these are some of the examples of the opportunities that you could take advantage of if you understand how to identify and spot the combat kings and queens. But you can further improve your gains by identifying stocks that have more of a price or percentage gap between oversold and overbought and thus offer more upside.

But the beauty is that the simplicity of this pattern allows you to take consistent profits while minimizing your risk. Another thing that you should know how to do when it comes to be comeback queens and Kings is how to scan for them and how to find them intraday. Now you could set up an automatic watch list, but that's a loaded topic. so let's just talk about how to scan for them and the way to do that.

In terms of finding stocks that are both oversold and overbought is going to add a study filter which means filtering for something that a study shows. And in this case, obviously we're looking for something that the RSI shows and that's oversold and overbought within me first or within that certain time span that we're looking for. So we're gonna specify which study we're talking about RSI and we're gonna set it so that when it crosses above overbought line that it'll include it in the list. and the way that we do that is by self telling it to tell us when it's over 70 and that's the first condition and the second condition is going to be oversold.

We want it to also be oversold. We're looking for both overbought and oversold, so we're gonna do the same thing. We're just gonna switch up a few things. Crosses below value 30 because 30 is the level at which it's oversold and 250.

That means that you know during that time span that is what it'll show us if it's both over above 70 and under 30 within the last 250 bars. Okay, and then this is the time period that we want that to happen. Let's just start with day. This will give us the the year chart Day day by day.

This will give us the your chart day by day and then we'll hit scan button. Ok, perfect. and then there's not really a very. There's not a great way to do this just because of the fact that it's gonna give you ones that are sporadically oversold.

So one of my favorite ways to do it is just to pull up the quick chart and pull in a bunch of the numbers. This doesn't look particularly well it could be. Let's check it out. See and yeah, this is this is a no-go and you're gonna have to scan through these.

Let's check out Zbra Zbra. Okay, this looks a little better. Yeah, so this this is a better. This is a better one.

See, we have a lot of different opportunities to buy in when it's oversold and sell out when it's overbought and it's repeated and repeated and then this is. this would be a good one for this time period. If you're looking for a different time period, say be one minute, one minute time span and again the one minute. It's the one day chart.

That's the intraday chart. It shows you a minute by minute. then we search. it should take a second to search.

These tend to be very slow because the criteria is a little bit slower to load as it's an indicator. We have some similar tickers. Let's check out: Zen Zen Zen Okay, this looks good. Zen Perfect.

So this is the 4-hour chart that works for the 4-hour chart as well. But yes, this is perfect. Okay, so we have oversold, overbought, oversold, overbought some fooful pre market, and after-hours Overbought Oversold. Overbought.

Fair value. Come back. Clean territory. Overbought.

Overbought. oversold. This is a good one. Let's try why this is probably not gonna be good one little dude.

Anyways, Nope, not good. Ugly chart. Yuck. This one's okay.

It does fit the criteria for comeback King It's just that now we're in the overbought territory so it needs to be oversold before we could take another position. But this is something that I would want to add to my personal watchlist so that we can buy and when it's oversold tomorrow, if it gets back to that point. The other problem is that like the the, the point from oversold to overbought is not that great. You know you're gonna have to.

This is what a 20 cent position? Okay, this is not that's not going to be enough of a gain to warrant taking a small position in it. DTS ZTS Yeah I Mean this is the comeback Queen For sure it offers someone this definitely offers some opportunities in terms of being a comeback queen, but again, it's one of those plays that you know isn't isn't ideal so you might want to scan a little bit lower. With this. let's try w RT C w RT c Sporadic Yeah, there is a comeback queen, but it's a little bit too sporadic and the volume seems to be a little too low.

But it is a comeback Queen for sure. And we do see some movement between over selling, so you definitely want to policy the list, mess around with time spans and see what works for you and what doesn't. Obviously the problem with this is that you're going to get a lot of positions that you know are easily able to predict, but it's only like five or six cents if the difference or twenty to fifty cents of a difference. And if it's a ten dollar position or a fifty dollar position, 10 cents really doesn't mean anything.

So you're gonna want to look for something that has you know a decent amount of a difference. I Also post some of the ones that I find on the Zip Trader Circle Nightly Watchlist that I post every single night. So anyways I Hope this video is helpful if you have any questions. comment below or go ahead and reach out to us on Zip Trader Circle.

Always remember, take the cake and don't get killed by the crown. Have a good day folks and I'll see you in the next video.