Mooer Stories Behind 10 Star Product Features: Line Drawing tools

Moomoo's product manager and experienced technical investor Garit recommends moomoo's line drawing feature to users who share the same passion for technical investing.

"We built this feature from scratch upon request from moomoo users four years ago. The feature now comprises over 30 line-drawing tools including Elliott Impulse Wave①, Head and Shoulders, Gann and Fibonacci Tools, Channel line and so on. It is one of my more widely used features on moomoo," Garit said.

To demonstrate how the line drawing feature helps him analyze the movement and read the market, he gave an example of a tech company that saw its stock price bounce in early December, 2022.

"In a classic technical investor's opinion, a twice-touched low of a price movement becomes a support level, and efficiently signals the change in the trend direction. This tech company is one of the benchmarks in the industry, and I monitor its price movement closely. A few months ago, its stock price jumped amid a market rally and that was when I noticed the double bottom pattern."

He first identified two bottoms that were almost at the same price level, which were the left shoulder and the right shoulder. He then found a peak between the two bottoms. Simply adding a neckline to the chart, which represents the resistance level, a W shape clearly emerged.

"The logic is very straightforward. Once the pattern is triggered and if the price breaks through the neckline, or the resistance level, it can potentially enter the profit-take session. In the same vein, a stop-loss order should be placed if the price remains below the neckline. A volume spike occurring during the two upward price movements also indicates strong upward price pressure and provides another signal of a double-bottom pattern," Garit said.

"But investors have to be extremely cautious when utilizing these techniques for real investing," He emphasized. “One could easily identify the wrong peak or wrong bottom. And sometimes, the price movement ends up with one more bottom. To be honest, stories like this happen all the time, even on veterans like me."

SpyderCall, a moomoo user and technical investor, shared another example of using drawing tools in technical investing—bearish continuous diamond, which is often regarded by technical investors as a sign of bearish market, signaling a possible extension of a downtrend. The pattern appears when the price generates higher highs and lower lows at first, and then the price oscillation amplitude gets smaller and finally reaches the break of support.

SpyderCall found this pattern on the candlestick charts of a biotechnology company (Company A) and a financial service corporation (Company B) amid the market volatility during the first half of 2022.

"Candlestick chart patterns can be very reliable at times if you know how to use them correctly," SpyderCall said. "Looking at these two charts, both companies entered and exited the diamond bearish pattern, which is how bearish continuous diamond pattern theoretically works. The diamond might look a bit ugly or lopsided, but the same rules apply."

"Remember the market will do whatever it wants, and sometimes it will do the exact opposite move that everyone in the market is thinking. Don't anticipate the market, participate in the market," SpyderCall added. "I mostly trade solely based on technical analysis, but I naturally combine fundamental and macroeconomic knowledge in every investment. Before making any investment, I would research what the overall markets are doing—either in the US or globally. It helps me to decide on an investment and detect an overall trend in the equity market."

①An impulse wave pattern is an indication of a strong move in a financial asset’s price coinciding with the main direction of the underlying trend. It is used frequently by adherents of Elliott Impulse Theory.