When the price is in the apex of the symetrical triangle (right where the two lines join together) on low volume, is that bullish or bearish? I believe it to be bullish. Lets say the price came from a higher peak and has now consolidated at the end point of the symetrical triangle. Stockcharts states that 25% of the time it can be bearish.
Three answers. You might want to get a basic TA book. FBP BO down FTP BO UP Sym pennant use bracket entry and look for FBO. the higher peak ws the R, this means that there is a possibility that r will be tested again. Pennants are internal formations of channels. The price usually stays in the channel. You can see, then, that when the sloped line of the pennant is part of a channel line (RTL, meaning trend Line), then you have a BO of the channel to consider. Look to the time prior to the formation of the pennant. Lhere you will see whether or not the channel was or was not traversed by the mini traversing dominant channel. It probably failed. If it did this is the actually beginning of the next channel and the pennant is just a pattern display of this occurance. by now you should know not to use any formation or lines on chart for trading. You simply do not know enough about what is going on. Not a good time to put money in a market.
Hi michaelscott, That type of price action you've described is missing some key info as in the price action it is occurring within. Simply, price in the apex, low volume, price declined from higher peak is not enough info to determine if its bullish or bearish. Is there a reason why you didn't want to post a chart example of exactly what your talking about so we can see the entire playing field instead of just a few yards? Therefore, I agree with Jack in that based upon what you've said...you don't have enough info. However, I suspect there's plenty enough info your just overlooking or didn't think it had any merits in its relationship to the symmetrical triangle. This type of tunnel vision can be problematic and/or lead to poor backtesting results (backtesting an incomplete picture). Mark
Its a complex triangle. I should have posted the chart though, but I figured out what I was trying to ask. Thanks anyway.
Graphically, a triangle, irrespective of time frame, must eventually resolve. No choice unless price moves dead sideways. That's not to say resolution couldn't be a headfake. That's where filters make their contribution. Propensity of existing holders to settle for less and less to relieve anxiety of ownership bias and...... incur a taxable event whereas prospective owners willing to bid up for fresh risk. Breakouts/breakdowns before the apex are more reliable. This can be confirmed observing charts going back decades. 2/3 of the distance to the apex is a good probability. Volume? Only volume that counts is the volume you transact in. What you truly transact in is PRICE. The broad notion of heavier volume would satisfy the primal instinct of safety in numbers OR induce transactions due to the feeling of being left behind. Hence every morning a proportion of gaps don't "hold". Ax merchandising of paper. Give me a quiet breakout anyday. I want the volume when I want OUT. A breakout that reverses BACK into the triangle is your clue to get out regasrdless of the reason. . Loss is then a latent asset to offset future gains.
Triangles in higher time frames are an expansion bar followed by 2 or 3 inside bars. If you see a Triangle go about 8 times higher to see how it appears. For example 5 min triangle on ym look at the 40 min chart. Prices represent meandering between statistical boundaries of higher time frames. John