A symmetrical triangle... but confirming a continuation on which trend?
Yesterday I posted about the Bearish Gartley. But this symmetrical triangle formed right after could be confirming either the downtrend since December... or the steeper uptrend since last Spring.
Hard to say. Intuitively I would imagine it would take a much large symmetrical triangle to consolidate such a long trend.
As such, since this has formed over the past few days... I'm assuming it's consolidating the shorter term trend...
And I'm learning bearish.
But am scaling in with very tight stop-losses. Because you never know with bitcoin. I always leave room for the upside.
These TA signals and patterns are just guides. Nothing is guaranteed. And probabilities don't change because of magic shapes.
@ckim802, Thanks for the reply and reference, ckim. I agree that lower highs and higher lows lead to a consolidation and likely breakout.
But a large volume spike is necessary for an upwards breakout to confirm. Especially for symmetrical triangles.
I'm basing my analysis on "The Technical Analysis of Financial Markets", published by the NY Institute of Finance.
Symmetrical triangles, or pennants since this is more short term, are categorized as continuation patterns, and as such tend to consolidate towards a move confirming the previous trend.
Here's an excerpt from the book on which I base my analysis. From Ch. 6 - "Continuation patterns"
But to your advice.... I appreciate it.I always leave room for the upside. Just in case it does break bull. :).
Because you're right. The consolidation has to go -somewhere-. And there are definitely higher lows.
But my stops remain tight, for the reasons mentioned in the OP and in that book excerpt.
Cheers!
ckim802
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@saadcrates, thanks to you too for the reference. I love a well-reasoned argument. You're point about volume, is a good one, and well taken. However, with so many eyes on the market right now, I think volume, or the lack thereof, might be an issue that solves itself, like getting close to the breakout line might be a self-fulling prophecy. I personally believe that we've been in an upward channel since the bottom of the crash on Feb 5th, although it may not feel like it. Pattern wise - the breakout line actually completes an inverse H&S formation, and if it does indeed complete, we're looking at a large increase:
saadcrates
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@ckim802, By the way... the reversal pattern at the bottom of that graph you linked... doesn't it look like an inverse head and shoulders?