Pull Back Fishing Down from a Symmetrical Triangle

NASDAQ:AMED   Amedisys Inc
AMED missed earnings . Barely beat EPS and missed on revenue.

AMED has broken to the downside from a symmetrical triangle. I watch for the 5th touch in a triangle or a rectangle as in reality you need 5 touches for the pattern to be formed. 3 touches to one trendline and 2 to the other, but a security can remain in these patterns for more touches of the trendlines . Price came Down to start forming this triangle. Price did not break through the resistance of the top trendline on the 5th touch. Just clues and does not always turn out this way.

Both rectangles and all 3 triangles are consolidation patterns, as well as a flag I suppose. These patterns can break either way, up or down.

There was a Cypher pattern inside but earnings has crushed this pattern. I will be glad when earnings season is over )o:

The market may feel AMED was overvalued before this massacre, as the stock is being severely punished today.

The candle may change by close, but it is bearish to gap down and sometimes the candle it gaps down on can render clues on whether to buy the gap down. It is considered a plus to gap down on a doji or a spinning top , especially green ones. It can also be a plus if price closes near the top of the gap down.

No recommendation
Comment: To clarify, gapping down on a red candle with long top wick is not optimal. Candles eventually form bottom wicks, especially on a weekly and monthly timeframe, but gapping down makes the daily candle very important as it tells you market sentiment if you listen, or pay attention to what the candle is telling you. Sometimes, well often, I take a look at the last candle on one of the longer like weekly or monthly, timeframes if unsure and you are not day-trading (different rules, well not really different rules but but lesser timeframes) If you see a candle body, unless it is at the bottom because then it could be an inverted hammer) then beware as that candle will eventually form a tail/shadow on the bottom/which can only mean the security is going down. at least it will go down long enough to form the shadow on the bottom.

The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.