Who got faked out by the accending triangle?

Discussion in 'Trading' started by stock_trad3r, Mar 19, 2007.

  1. I decided to try some daytrading and I saw the perfect accending triangle for nasdaq 10 minutes ago on the 1 min chart and it fizzled..

    anyone else notice that?
  2. atozcom


    Perfect ascending triangle is in the eye of the beholder. First there is the problem of being "perfect". Then there is the problem of being a "triangle". Then is it "ascending"?. Lastly, the triangle in your time frame may not be the time frame of other trade's time frame

    It could be some other trader's descending something in other time frame.

    Price patterns are self fulfilling prophecy. It only works if other traders see it like you and act on it like you, otherwise it will fail.

    There is no guarantee that any price pattern would work 100% of the time.
  3. The ascending triangle was far from perfect, if it even qualifies in the first place. You'd typically want to see multiple tests of the horizontal upper ceiling of the triangle, like in his example from the euro daily:


    The NDX never had multiple tests of the 1:55 high (see attached), so it wasn't the best setup. The higher probability trade was buying the 1pm reversal off the R1 pivot.
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  4. atozcom


    You can just as well draw an ascending parallel channel on the chart.

    Absolute not a triangle. Of course hind sight is 20/20.
  5. Looks more like a head and shoulders than an ascending triangle..
  6. This is precisely why the is always opportunity in the market.

    Not a slam, just an observation. It could very well be me tomorrow if I'm not focused.
  7. ER2


    Try trading pattern failures exclusively for a week -- you might be surprised how much your P/L improves. :D

  8. atozcom


    I was in an "Advanced Technical Analysis" seminar last year. There were 8 students in the seminar. The instructor ask what each of us see on the chart. There were 6 different answer out of 8 students.

    He said:

    1) if you have to cringe you eyes to see the pattern, its not there.
    2) If you are the only one to see the pattern, its going to fail.
    3) If you are the last one to see the pattern, its going to fail.
    4) Price pattern is a self fulfilling prophecy. You need a lot of other trader think alike to make it work.
    5) Different trader may act differently to make the price pattern fail.
    6) Price pattern will not give you an "edge" because it is observable by any one.

    So who is trading base only on price pattern such as ascending triangle, descending triangle, wedges, flags...
  9. Not that i trade US markets but my take:
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  10. I saw the exact same trend channel as you. I was just trying to demonstrate for the OP how the triangle wasn't formed by definition.

    Here's another interesting potential triangle break underway at this hour in the yen (see attached). Yes there was a false headfake last week, but it was followed by higher lows, and this time around it has neutral BOJ remarks and an MACD cross to its advantage. I'm short the yen futures.
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    #10     Mar 20, 2007