Dan explains why wheel traders must think about technical analysis differently from momentum or breakout traders. Using a Home Depot analogy, Dan shows how the right tool for the job matters—especially when selecting indicators for skate-objective trades. He dives into oscillators (with a focus on RSI) and introduces a new strike-selection concept he’s developing.

• Why trends and momentum are often the enemy of wheel traders
• Using technical analysis to reduce trades per wheel cycle
• Choosing the right indicators for skate-objective trades
• Oscillators and how they differ from breakout indicators
• Deep dive into the Relative Strength Index (RSI)
• Overbought and oversold signals for covered calls and cash-secured puts
• RSI divergences and what they signal for wheel traders
• Introduction to the PAS (Price-history Anchored Strike) indicator
• Why wheel traders avoid “trendy” stocks
• Overview of volatility analysis as part of the options trader’s trifecta

Wheel traders don’t want momentum. Strong trends often force rolls, increase trade count and slow down wheel cycles.

Technical analysis should reduce activity, not increase it. The goal is fewer trades per cycle, not more signals.

Oscillators are better tools for wheel traders. Indicators like RSI help identify waning momentum rather than breakouts.

RSI can improve strike selection. Overbought and oversold reversals—and divergences—can increase the odds of skating successfully.

Indicators don’t predict the future. They provide a small statistical edge when used correctly.

Volatility matters as much as price. Understanding whether options are overpriced or underpriced is critical for consistent income strategies.

Learn more about host Dan Passarelli and Market Taker Mentoring: MarketTaker.com

Get exclusive content including video trade walk-throughs, Dan's actual trades, monthly AMA webinars and more: wealthbuildingpodcast.com

Subscribe on your preferred platform and leave a review to help more traders discover the show.

Next Episode Preview: Next time, Dan goes deeper into volatility analysis, expanding on how wheel traders can evaluate implied volatility, historical volatility, and upcoming catalysts to improve covered call and cash-secured put decisions.

Disclosure:

Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document

Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.

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Dan demystifies one of the most misunderstood areas of technical analysis: support and resistance. Rather than treating these levels as “magic lines on a chart,” Dan explains the market mechanics behind them—how real buy and sell orders, supply and demand, and human decision-making actually move prices.

Key Topics

• Why support and resistance are commonly misunderstood

• Technical analysis as a map of human behavior (price, not value)

• The basics of market mechanics: bids, asks and order size

• How supply and demand move prices tick-by-tick

• How horizontal support and resistance levels are created

• Why price levels hold—and the three main reasons they break

• Moving averages (SMA/EMA) as dynamic support and resistance

• Why the 200-day moving average matters to institutions

• “Death cross” and “golden cross” and what they signal

• Applying support/resistance to wheel strike selection for skate trades

Key Takeaways

Support and resistance aren’t magic. They reflect real buying and selling pressure created by market participants.

Technical analysis explains price behavior, not valuation. It tracks what price and volume did—and how traders reacted.

Prices move through order flow. Buyers absorb offers to push price up; sellers take out bids to push price down.

Support/resistance can fail for predictable reasons. Levels break when supply/demand overwhelms the other side, participants finish their trades or new information changes valuation inputs.

Moving averages can become self-reinforcing levels. Long-term averages like the 200-day influence institutional decisions and can behave like support or resistance.

Wheel traders can use these levels to improve skate trades. Support can inform cash-secured put strikes; resistance can inform covered call strikes.

Connect

Learn more about host Dan Passarelli and Market Taker Mentoring: MarketTaker.com

Get exclusive content including video trade walk-throughs, Dan's actual trades, monthly AMA webinars and more: wealthbuildingpodcast.com

Subscribe on your preferred platform and leave a review to help more traders discover the show.

Next Episode Preview: Next time, Dan continues building on technical analysis for wheel traders—going deeper into how to apply support, resistance and key chart-based levels to choose strikes that improve the probability of skating without assignment.

Disclosure:

Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document

Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.

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Dan breaks down the true “secret sauce” of successful wheel trading: pairing the right objective (trade vs. skate) with the right type of analysis (fundamental vs. technical). He demonstrates how to reverse-engineer strike prices using dividend yields and valuation metrics and walks through a real example using Verizon (VZ).

• Defining the skate objective vs. the trade objective
• Why trade objective trades pair naturally with fundamental analysis
• Why skate objective trades pair naturally with technical analysis
• How to reverse-engineer strike prices using target dividend yields
• How to set strike prices using target P/E ratios
• Real-world example: Verizon (VZ) dividend and valuation analysis
• When to wait for better pricing or volatility before selling puts
• Preview of using support and resistance for skate trades

Every wheel trade needs a single, clear objective. Choose either skate (avoid assignment) or trade (seek assignment) to stay consistent and intentional.

Match your analysis to your objective. Use fundamentals for trade-objective entries and technicals for skate-objective premium selling.

Reverse-engineer your strike prices. Start with the yield or valuation you want, determine the stock price that achieves it, and choose the strike accordingly.

Premium can tweak your effective entry price—but don’t lose the plot. Premium helps refine entry, but fundamentals should guide the trade.

Wheel trading can be “almost win–win,” but risk still exists. Assignment locks in value; non-assignment yields premium—but price risk remains.

Conservative income plays can complement growth positions. High-yield value names can balance more aggressive holdings.

Learn more about host Dan Passarelli and Market Taker Mentoring: MarketTaker.com

Get exclusive content including video trade walk-throughs, Dan's actual trades, monthly AMA webinars and more: wealthbuildingpodcast.com

Subscribe on your preferred platform and leave a review to help more traders discover the show.

Next Episode Preview: Next time, Dan digs deeper into technical analysis for skate-objective trades, focusing on how horizontal support and resistance can help identify strike prices where the stock is less likely to move—boosting your confidence and consistency when selling premium.

Disclosure:

Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD) which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document

Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.

Trumpet Trumpet Fanfare by bevibeldesign -- https://freesound.org/s/350428/ -- License: Creative Commons 0

Wah Wah Wah

Wah wah trumpet failed joke punch line.wav by Doctor_Jekyll -- https://freesound.org/s/240195/ -- License: Attribution 4.0

Dramatic Drum Roll

dramatic drum roll.wav by ingsey101 -- https://freesound.org/s/51401/

-- License: Attribution 3.0