Everyone keeping up with NIO's chart is seeing this triangle, however, there seems to be a split on what type of triangle it is and what to expect. I will tell you my opinion on both.
-Mentioned in "Technical analysis of the stock market" by John J. Murphy (I reference this book a lot, great read), it states that volume plays a great role in determining which way the triangle is favoring. During the pattern, if volume supports the bulls, it will spike in bullish movements, if it supports the bears it will spike in bearish movements.
-Here NIO is showing that the volume is supporting the bulls. (Good news)
So, what type of triangle is it? (Descending triangle or symmetrical triangle?)
- On the daily chart, this triangle is seen as a descending triangle, however, this type of volume behavior is opposite of what would be expected in a descending triangle because those triangles are bearish patterns, and therefore the volume would increase as the price drops. But that is not the case here.
- On the hourly chart, this triangle looks like a symmetrical triangle (wedge), commonly a continuation pattern but is more often used by the trader waiting for it to break one of the trend lines because that is the direction it will most likely follow, due to that they are sometimes found at the end of trends and may cause a reversal.
- From this information, it seems like a Wedge makes more sense than a descending triangle.
So what should I expect?
-Now that the triangle is defined one would expect symmetrical triangle behavior which is as I mentioned, wait for it to penetrate one of its trendlines. BUT, since the volume increases in bullish moves. This might mean it is more likely to break its top trendline and move up supporting the long-awaited reversal.
This is my opinion, not financial advice. Let me know what you guys think!
-Mentioned in "Technical analysis of the stock market" by John J. Murphy (I reference this book a lot, great read), it states that volume plays a great role in determining which way the triangle is favoring. During the pattern, if volume supports the bulls, it will spike in bullish movements, if it supports the bears it will spike in bearish movements.
-Here NIO is showing that the volume is supporting the bulls. (Good news)
So, what type of triangle is it? (Descending triangle or symmetrical triangle?)
- On the daily chart, this triangle is seen as a descending triangle, however, this type of volume behavior is opposite of what would be expected in a descending triangle because those triangles are bearish patterns, and therefore the volume would increase as the price drops. But that is not the case here.
- On the hourly chart, this triangle looks like a symmetrical triangle (wedge), commonly a continuation pattern but is more often used by the trader waiting for it to break one of the trend lines because that is the direction it will most likely follow, due to that they are sometimes found at the end of trends and may cause a reversal.
- From this information, it seems like a Wedge makes more sense than a descending triangle.
So what should I expect?
-Now that the triangle is defined one would expect symmetrical triangle behavior which is as I mentioned, wait for it to penetrate one of its trendlines. BUT, since the volume increases in bullish moves. This might mean it is more likely to break its top trendline and move up supporting the long-awaited reversal.
This is my opinion, not financial advice. Let me know what you guys think!
Nota
NIO broke the top trendline as expected! Waiting for confirmation.
Penafian
Maklumat dan penerbitan adalah tidak dimaksudkan untuk menjadi, dan tidak membentuk, nasihat untuk kewangan, pelaburan, perdagangan dan jenis-jenis lain atau cadangan yang dibekalkan atau disahkan oleh TradingView. Baca dengan lebih lanjut di Terma Penggunaan.
Penafian
Maklumat dan penerbitan adalah tidak dimaksudkan untuk menjadi, dan tidak membentuk, nasihat untuk kewangan, pelaburan, perdagangan dan jenis-jenis lain atau cadangan yang dibekalkan atau disahkan oleh TradingView. Baca dengan lebih lanjut di Terma Penggunaan.