Just updating the subject idea. Back in 2022, this textbook symmetric triangle had caught my attention, for how neatly and ostensibly it was being displayed.
I find this pattern interesting because of how it moves from volatility to the lack of it, slowly expelling the traders who are preventing this market from moving where it wants to, until they are no longer participating and the price is free to break-out and move unburdened as it is moving at the moment.
Worth mentioning also that fake-out as pointed out by the green arrow, it shows us that there are some traders in this market with pockets deep enough to bid it down, just to trap the more unexperienced traders into selling this breakout and fueling the buy orders of the initial group, which then takes off with few or no more sellers to obstruct the rally.
Another note on this fakeout for future reference: wait for a successful retest to enter. Do you see that successful retest in this market? No, those nOv and Dec 2022 candles should have been bearish candlestick patterns or structural breakouts on the short side, created against the broker trendline and EMAs. Instead, they kept on piercing through and in Feb 2023, we received a definite trigger for a trade on the long side.
Finally, at this highlighted area, as the area from the massive sell off that preceded this pattern, erupted. The odds are more bears will be sitting in that range. The odds of bullish undisputed control in this market diminish substantially in that area.
Most importantly: hindsight and narration bias make you think that this outcome was 100% predictable. It was not. Price action and technical analysis is an excellent tool to guide us into discovering the path of least resistance, quantifying the markets and the patterns therein, however, at the end of the day, this is nothing but a probabilistic assessment. Reality is complex, anything can happen tomorrow, next week, next month ...
... what should that tell you as a trader? Manage risk, manage risk, manage risk, that's just, by far, your paramount remit as a trader.
Cheers,
Tenacious Tribe - Quantified Trading Strategies & Studies
I find this pattern interesting because of how it moves from volatility to the lack of it, slowly expelling the traders who are preventing this market from moving where it wants to, until they are no longer participating and the price is free to break-out and move unburdened as it is moving at the moment.
Worth mentioning also that fake-out as pointed out by the green arrow, it shows us that there are some traders in this market with pockets deep enough to bid it down, just to trap the more unexperienced traders into selling this breakout and fueling the buy orders of the initial group, which then takes off with few or no more sellers to obstruct the rally.
Another note on this fakeout for future reference: wait for a successful retest to enter. Do you see that successful retest in this market? No, those nOv and Dec 2022 candles should have been bearish candlestick patterns or structural breakouts on the short side, created against the broker trendline and EMAs. Instead, they kept on piercing through and in Feb 2023, we received a definite trigger for a trade on the long side.
Finally, at this highlighted area, as the area from the massive sell off that preceded this pattern, erupted. The odds are more bears will be sitting in that range. The odds of bullish undisputed control in this market diminish substantially in that area.
Most importantly: hindsight and narration bias make you think that this outcome was 100% predictable. It was not. Price action and technical analysis is an excellent tool to guide us into discovering the path of least resistance, quantifying the markets and the patterns therein, however, at the end of the day, this is nothing but a probabilistic assessment. Reality is complex, anything can happen tomorrow, next week, next month ...
... what should that tell you as a trader? Manage risk, manage risk, manage risk, that's just, by far, your paramount remit as a trader.
Cheers,
Tenacious Tribe - Quantified Trading Strategies & Studies
