Chart Pattern - or Pattern
The is a that begins wide at the top and contracts as prices move lower. This price action forms a cone that slopes down as the reaction highs and reaction lows converge. In contrast to symmetrical triangles, which have no definitive slope and no bias, falling definitely slope down and have a bias. However, this bias cannot be realized until a resistance breakout.
The can also fit into the continuation category. As a continuation pattern, the will still slope down, but the slope will be against the prevailing uptrend. As a reversal pattern, the slopes down and with the prevailing trend. Regardless of the type (reversal or continuation), falling are regarded as patterns.
Prior Trend: To qualify as a reversal pattern, there must be a prior trend to reverse. Ideally, the will form after an extended downtrend and mark the final low. The pattern usually forms over a 3-6 month period and the preceding downtrend should be at least 3 months old.
Upper Resistance Line: It takes at least two reaction highs to form the upper resistance line, ideally three. Each reaction high should be lower than the previous highs.
Lower Support Line: At least two reaction lows are required to form the lower support line. Each reaction low should be lower than the previous lows.
Contraction: The upper resistance line and lower support line converge to form a cone as the pattern matures. The reaction lows still penetrate the previous lows, but this penetration becomes shallower. Shallower lows indicate a decrease in selling pressure and create a lower support line with less negative slope than the upper resistance line.
Resistance Break: confirmation of the pattern does not come until the resistance line is broken in convincing fashion. It is sometimes prudent to wait for a break above the previous reaction high for further confirmation. Once resistance is broken, there can sometimes be a correction to test the new found .
Volume: While is not particularly important on rising , it is an essential ingredient to confirm a breakout. Without an expansion of , the breakout will lack conviction and be vulnerable to failure.
This chart was first pointed out by @Dmtz4444
Also looking at ADX compared to MACD. We are getting close to converging/conforming pattern ADX (rising +20), while MACD is moving holding steady. Watching weekly chart and 2 day chart to see a signal crossover.
Judging by the 2 Day chart we still have time before going long JCP. If JCP shows convergence on dual fisher 2 Day, all bets are off and we could go much further lower.
First Trade Date (yyyy-mm-dd) 1946-01-08
Bullish timing > MidHeaven 12 Degrees 30' = Sagittarius Nov. 23 - Dec. 21 Look for New Moons, New Moon with Perigee, Lunar Eclipse when in Sagittarius, also look for a rare Pallas in Sagittarius
Bearish timing, events > when Mars and or Saturn is in Cancer, House 5 (very negative) June 21 - July 22