At the request of many of you to identify helpful chart patterns, today we'll look at
a simple bar chart pattern called a triangle. As you may guess, this pattern got its
name because it's shaped like a triangle. There are a few variations, and of course,
there are a few interpretations.
This basic pattern is also called a pennant, but what you choose to call it isn't as
important as the squeezing effect the top and bottom of the flag shape can have on
stock prices. Simply put, when a set of price bars establishes support and resistance
lines that will eventually intersect one another, these support and resistance lines
form a narrowing trading range that will eventually shrink into nonexistence.
Obviously stocks have to trade at some sort of price level, so shares will be forced
to move above support, or below resistance
But is there a way to determine which way prices will go in relation to the triangle?
Obviously no chart is perfectly predictable, but you can get a good idea of future
price movement based on the direction the triangle is pointing. If it's an ascending
triangle, you're more likely to move higher as the price approaches the tip of the
shape. And if the triangle is descending, then you're more likely to fall under
support as you approach the end of that pennant. In either case, the price movement
is the result of contracting supprt and resistance.
In the chart of Ventana Medical Systems (VMSI) below, we see both kinds of chart
triangles. Between June and September, the top edge (the resistance line) was sloped
downward at a steeper degree than the bottom edge (support) was pointing higher. This
was a sign that VMSI had more difficulty in moving higher than moving lower. Shares
did indeed plummet when boxed into the end of the bearish pennant.
VMSI - Daily
Shortly after that, a new triangle was formed - actually two triangles (one inside
the other). Both of them were bullish though, since they both were generally pointed
up. The larger was one spanned over several days, while the smaller one formed
immediately prior to the big jump. In this case, while we were making higher lows, we
kept pushing at the resistance line. When the price bars finally were forced into the
tip of the triangle, they exploded to the upside.
These triangle patterns are a great tool, and as always, they are best used in
conjunction with other analysis tools.
Se não receio o erro é porque estou sempre pronto a corrigi-lo
There's no bull side and no bear side. JUST THE RIGHT SIDE!
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