DOW forming symmetrical triangle

14 Mac 2018

The Dow is forming a symmetrical triangle. At least for single stocks, "symmetrical triangles breakout to the upside 54% of the time."

Source of quote: finvids.com/Chart-Pattern/Triangles

14 Mac 2018

Nota

In the few hours after I posted this, it's amazing to see how the trend literally bounced along the lower bound of the triangle:

as if the lower bound was a real thing, and I have to suspect in some respect it was/is a real thing, the tidal boundary between aggregate bears and bulls.

15 Mac 2018

Nota

Couldn't be a better example of a symmetrical triangle...

15 Mac 2018

Nota

Excellent review of symmetrical triangles @ stockcharts.com/school/doku.php?id=chart_school:chart_analysis:chart_patterns:symmetrical_triangle_continuation

Quoting therefrom:

"Breakout Direction: The future direction of the breakout can only be determined after the break has occurred. Sounds obvious enough, but attempting to guess the direction of the breakout can be dangerous. Even though a continuation pattern is supposed to breakout in the direction of the long-term trend, this is not always the case."

"In Technical Analysis of Stock Trends (1948), Edwards and Magee suggest that roughly 75% of symmetrical triangles are continuation patterns and the rest mark reversals. The reversal patterns can be especially difficult to analyze and often have false breakouts. Even so, we should not anticipate the direction of the breakout, but rather wait for it to happen."

"Breakout Confirmation: For a break to be considered valid, it should be on a closing basis. Some traders apply a price (3% break) or time (sustained for 3 days) filter to confirm validity. The breakout should occur with an expansion in volume, especially on upside breakouts."

The other source I quoted previously above said 54% of the time a symmetrical triangle breaks out upwards. But statistically, that's pretty much 50/50 odds. So like this source says, don't count your profits or losses yet. What I like about this formation is it implies the market might finally make a decisive move out of the current choppy seas.