Prepare for a flip in psychology.
Traditionally a descending triangle is a bearish continuation pattern. Chart patterns are merely a representation of psychology. The further the pattern completes the more the psychology changes. Typically a descending triangle has the highest probability of bearish breakout at 2/3rds from completion (Edwards and McGee, 1948). This would peg the fallout outcome during the month of August. The further we move to the apex of the triangle the more retail traders will jump on the short bandwagon. In actuality, the longer we remain in the triangle the more selling pressure wains and the closer the trend resembles that of a falling wedge - a bullish reversal pattern. Furthermore, professional traders will apply cover for their shorts as we reach the apex. An expansion of volume in October would likely result in an explosive bullish up move to the identified fib target.
If I'm wrong, I expect a downward move to form a larger falling wedge to result in a strong bullish move later in the year - Santa Claus rally that retests 50% of the original upswing.
Remember, trade and/or invest at your own risk. This information is presented for educational purposes only.
Traditionally a descending triangle is a bearish continuation pattern. Chart patterns are merely a representation of psychology. The further the pattern completes the more the psychology changes. Typically a descending triangle has the highest probability of bearish breakout at 2/3rds from completion (Edwards and McGee, 1948). This would peg the fallout outcome during the month of August. The further we move to the apex of the triangle the more retail traders will jump on the short bandwagon. In actuality, the longer we remain in the triangle the more selling pressure wains and the closer the trend resembles that of a falling wedge - a bullish reversal pattern. Furthermore, professional traders will apply cover for their shorts as we reach the apex. An expansion of volume in October would likely result in an explosive bullish up move to the identified fib target.
If I'm wrong, I expect a downward move to form a larger falling wedge to result in a strong bullish move later in the year - Santa Claus rally that retests 50% of the original upswing.
Remember, trade and/or invest at your own risk. This information is presented for educational purposes only.