This is the 26th Day course in a series of 60-Days called “Technical Analysis Training”
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Top Triangle/Wedge Chart Pattern
A Top Triangle/Wedge is regarded a bearish signal, indicating a possible reversal of the existing uptrend to a new downtrend.
A Top Triangle/Wedge consists of a group of designs which have the same common shape as Symmetrical Triangles, Wedges, Ascending Triangles and Descending Triangles. The distinction is that the structures grouped together as this pattern are change of state and not continuation designs. These patterns have two converging trend lines. The pattern will display two highs touching the upper trend line and two lows touching the lower trend line.
This pattern is confirmed when the price breaks downward out of the Triangle/Wedge formation to close below the reduce trend line.
Volume is an important factor to consider. Typically, volume follows a reliable pattern: volume should diminish as the price swings back and forth between an increasingly narrow range of highs and lows. However, when the breakout occurs, there should be a noticeable increase in volume. If this volume picture is not clear, investors should be cautious about decisions based on this Triangle/Wedge.
Next are significant attributes for this design.
Occurrence of a Breakout
Technical analysts give close interest to just how lengthy the pattern provides to produce to its apex. The basic guideline is that costs must break out – obviously penetrate the lower trend line – someplace between three-quarters and two-thirds of the horizontal width of the development. The break out, in another words, should happen well before the pattern achieves the apex of the Triangle/Wedge. The nearer the breakout happens to the apex the less dependable the formation.
Duration of the Triangle/Wedge
This pattern is a reasonably short-term. While long-term Triangles/Wedges do form, the most reliable patterns take between one and three months to form.
Investors should notice volume reducing as the pattern advances toward the apex of the Triangle/Wedge. At breakout, nevertheless, there should be a apparent increase in volume.
Duration of the Pattern
Observe the period of the layout and its link to your trading time period. The period of the pattern is thought about to be an indicator of the period of the impact of this pattern. The longer the pattern the longer it will take for the price to reach its target. The shorter the pattern the sooner the price move. If you are thinking about a short-term trading possibility, look for a pattern with a short period. If you are considering a longer-term trading possibility, look for a pattern with a longer duration.
The target price provides an important indication about the potential price move that this pattern indicates. Consider whether the target price for this pattern is sufficient to provide adequate returns after your costs (such as commissions) have been taken into account. A good rule of thumb is that the target price must indicate a potential return of greater than 5% before a pattern should be considered useful. However you must consider the current price and the volume of shares you intend to trade. Also, check that the target price has not already been achieved.
The inbound trend is an worthwhile characteristic of the design. A shallow inbound trend may suggest a period of consolidation before the price move suggested by the pattern begins. Look for an inbound trend that is longer than the duration of the pattern. A good rule of thumb is that the inbound trend must be at least two times the period of the design.
Criteria that Supports
Support and Resistance
Look for a location of support or resistance around the target price. A region of price combination or a strong Support and opposition Line at or about the target price is a strong indicator that the price will move to that point.
Watch for the 200 day moving average to flatten. When prices cross below the 200 day moving average (usually about two-thirds to three-quarters of the way through the pattern), the pattern is considered more reliable.
A intense volume spike on the day of the design confirmation is a strong indicator in support of the potential for this pattern. The volume spike should be significantly above the average of the volume for the duration of the pattern. In addition, the volume during the duration of the pattern should be decreasing on average.
Criteria that Refutes
No Volume Spike on Breakout
The lack of a volume spike on the day of the pattern confirmation is an indication that this pattern may not be reliable. In addition, if the volume has remained constant, or was increasing, over the duration of the pattern, then this pattern should be considered less reliable.
Short Inbound Trend
An inbound trend that is significantly shorter than the pattern duration is an indication that this pattern should be considered less reliable.
This pattern is a happen of converging trend lines of support and resistance that give this pattern its unique shape. This happens because the trading exercise gets more powerful and stronger until the market breaks out with great force. Buyers and sellers find themselves in a stage where they are not sure where the market is on course. Their anxiety is labeled by their steps of buying and providing sooner, making the range of the price motions additional and more close. As the range between the top and troughs marking the advancement of price narrows, the trend lines meet at the “apex,”.
The narrowing of the trading activity and the decreasing volume of trade mirror the indecisiveness in the market. Lastly advice or choice in the market is strike and this is shown as the price breaks out of the Triangle/Wedge. A spike in volume on this prison-breaking date reflects stronger opinion that the stock must move in that way.
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TABLE OF CONTENTS
Candlestick and Chart Patterns (15 Days)
7 Most Important Candlestick Chart Patterns
- Gap Down Chart Pattern
- Gap Up Chart Pattern
- Gravestone Short-term Chart Pattern
- Hammer Candle Stick Chart Pattern
- Hanging Man Short-term Stock Chart Pattern
- Inverted Hammer Stock Chart Pattern
- Shooting Star Candle Stick Pattern
Top 2 Bearish Chart Patterns
Top 6 Bullish Chart Patterns
- Engulfing Line (Bullish) Chart Pattern
- Exhaustion Bar Chart Pattern (Bullish)
- Inside Bar Chart Pattern
- Island Bottom Chart Pattern
- Key Reversal Bar (Bullish) Chart Pattern
- Two Bar Reversal (Bullish) Chart Pattern
Indicators & Oscillators (12 Days)
Bullish or Bearish Indicators
Bullish or Bearish Oscillators
- Bollinger Bands Oscillator
- Commodity Channel Index (CCI)
- Fast Stochastic Oscillator
- Know Sure Thing (KST) Oscillator
- Momentum Oscillator
- Moving Average Convergence/Divergence (MACD) Oscillator
- Relative Strength Index (RSI)
- Slow Stochastic Oscillator
- Williams %R Oscillator
Classic Chart Patterns (29 Days)
Bearish Classic Chart Patterns
- Continuation Diamond (Bearish) Chart Pattern
- Continuation Wedge (Bearish)
- Descending Continuation Triangle Chart Pattern
- Diamond Top Chart Pattern
- Double Top Chart Pattern
- Downside Break Chart Pattern – Rectangle
- Flag Bearish Chart Pattern
- Head and Shoulders Top Chart Pattern
- Megaphone Top Chart Pattern
- Pennant Bearish Chart Pattern
- Rounded Top Chart Pattern
- Symmetrical Continuation Triangle (Bearish)
- Top Triangle/Wedge Chart Pattern
- Triple Top Chart Pattern
Bullish Classic Chart Patterns
- Ascending Continuation Triangle Chart Pattern
- Bottom Triangle Or Wedge Chart Pattern
- Continuation Diamond (Bullish) Chart Pattern
- Continuation Wedge Chart Pattern (Bullish)
- Cup with Handle Bullish Chart Pattern
- Diamond Bottom Chart Pattern
- Double Bottom Chart Pattern
- Flag Bullish Chart Pattern
- Head and Shoulders Bottom Chart Pattern
- Megaphone Bottom Chart Pattern
- Pennant Bullish Chart Pattern
- Round Bottom Chart Pattern
- Symmetrical Continuation Triangle Bullish
- Triple Bottom Chart Pattern
- Upside Breakout Chart Pattern – Rectangle
Best Trading Theories (4 Days)
- Basics of Dow theory trading strategy forecasts
- Motive (Impulse) Waves
- Corrective Waves
- Wyckoff Chart Reading
Kind attention: this course is helpful for beginner and intermediate traders. It’s free for everyone. Advanced modules, trading strategies, and data (in-depth) are available for Moneymunch’s premium subscribers.