I definitely classify myself in the pattern recognition trader's camp. However, some of my best trades are put on AFTER a pattern is broken. One that I'm looking at right now is a Weekly chart of (IR). It had completed a Bearish Gartley pattern up to 49.25. It held that level for a few weeks. However, today this stock pushed up strongly through the Pattern. This is a major alert for me and signal to be long the stock. Off of this broken Bearish Gartley, I have a final objective of 61.00. Comments welcomed re: broken patterns and/or IR. -D
Good pick - this weeks gap up was over a short-term t/l drawn across the (daily) tops - once it gapped over it ran. The only resistance I see is last year's high - 54.40. Do you follow tradethemove.com? Your target coincides with what they wrote was the 1.27% extension of the 2002 High/Low. I think you have a good shot of getting there, but expect some pullbacks and resistance along the way - especially from the previous high. Best of luck.
Derrik, I posted a chart to help illustrate.... In looking at the pattern you mentioned on IR, point D of the bearish gartley was set to complete above the .886 retracement making it a lower probability set up. Also, on the daily chart, there is a bar with a long tail that bounced off the .382 retracement on July 1st indicating to me that a stronger move up was in the works. It seems you made the right decision in reversing your position. Given the confluence of Time cycles and the approach of the previous high indicated at X, there may be some retracement. Good luck with it, it may be a nice ride up to a butterfly top at the 1.27 extension. Al C.