It wasn't until this morning, when I took a fresh look at this chart, that I realized that ALL of yesterday's trading is a Double Nested Symmetrical Triangle (the pattern in white). There's the Descending Triangle (in red) that we looked at yesterday, and also the Falling Wedge that I traded when it broke out at 2:45PM, near 57.20 (pattern in yellow), but I hadn't realized that the entire session is a Symmetrical Triangle, with those two patterns "nested" within it. The first Falling Wedge that I traded yesterday, basis the 1-Minute chart, doesn't even show up in this bigger time-frame chart (10-Minute). As we know, multiple patterns and/or nested patterns can "pack some punch" on a breakout, so we'll see.
Bears who didn't cover the Bullish Falling Wedge breakout at 2:45PM or who didn't cover this Symmtrical Triangle and now short TWO upside technical breakouts, and they could feel some heat if they don't knock the stock back inside the pattern. FCX is sitting right at the top of the Symmetrical Triangle. It technically broke out of the pattern just prior to the close and looks to be sitting smack on White Trendline #1 -#3, so an upside target of about 58.53 is IN PLAY, as long as FCX trades above the top of the Symmetrical Triangle.
Math:
57.68 - Yesterday morning's high of the pattern
56.59 - The Descending Triangle Double Low of the pattern
57.68 - 56.59 = 1.09 points of upside added to breakout, which looks to have occurred right about here, so we'll use the 57.44.
57.44 + 1.09 = Target: 58.53 IN PLAY.
What would be especially nice if FCX can get anywhere near 58.53 is that it would negate the possibility that Wednesday's move to a new high, then close below the prior day's session, was a downside Reversal Candle and also would do some damage to any case for a Bearish Wolfe, though I'd still keep an eye on that. We know how patterns love to "morph." LOL.
Notice all of the bullish patterns, just in the past four sessions! If I get bored, I'll have to go back over my posts of the past two weeks to see how many bullish patterns there have been, and I've probably missed a few.
Although it might look like FCX "hasn't been doing anything," the Bulls have done a wonderful job of base-building and pattern building. For their execution since the Bullish Falling Wedge of St. Paddy's Day, the Bulls' scores for Technical Merit continue to be...
10...10...10...10...10...10....11*
(* Judge #7 now is enamored of the DOUBLE Nested Symmetrical Triangle...LOL).
EDIT: For the first Bullish Falling Wedge on the chart (light blue), the high at #3 should be over to the right a bit, at the next high. Sorry, I drew that improperly.
7 comments:
Melf:
How do we know that a symmetrical triangle pattern is bullish or bearish?
Priapusmon,
We don't have FINAL confirmation unless/until the target gets MADE, or reasonably approximated, but by then, it obviously is too late to play it. LOL.
So-o, what we need to do (as with ANY pattern) is to decide whether or not we like the pattern well enough to play it, which includes knowing where we would put our stop if the trade goes wrong.
Some patterns have "Fakeout/Breakouts" or "Fakeout/Breakdowns," then reverse and break out of the other side of the pattern, in which case we want to get out of the trade.
These patterns that we've been looking at are known as "continuation patterns." They generally break out in the direction of the dominant trend, which in FCX, has been bullish since the St. Paddy's Day breakout of the BIG Bullish Falling Wedge.
There never are any guarantees, or we'd all be billionaires, but it's best to play WITH THE TREND.
Thank you very much.
So, we can only say a symmetrical triangle is bullish or bearish after it breaks out up or down, respectively. Am I correct?
Another thing, Why a Falling Wedge is bullish? What is the real pressure there to go up?
Priapusmon,
Go to Stockcharts.com and take a look at their section on chart patterns. I think they're listed under "Chart School," or something like that. I'm sure that you can find a wealth of information, too, if you go to Google.com, and do an Advanced Search on terms like, "technical analysis," and maybe "chart patterns." You also can try entering specific patterns, like "symmetrical triangle," "falling wedge," "rising wedge," etc. You should find plenty of answers to your questions. Good luck!
Yes, I know, but some of the things we understand from the experience.
So, I was asking your view.
(Yes, I know, but some of the things we understand from the experience.
So, I was asking your view).
And, I was tactfully trying to avoid answering your question because it would take a ton of time that I don't have to explain why the answer is, "No, you are not necessarily correct to say that a Symmetrical Triangle is bullish or bearish after it breaks up or down."
We can say that it is "constructively bullish" or "constructively bearish," but we only know with certitude if it actually WAS as bullish or bearish as we thought if the target gets MADE, or reasonably approximated. We also could get, for example, 75% or 80% of the target. That certainly would be at least "somewhat" bullish (or bearish, if it's a bearish target), just not as bullish or bearish as we thought.
Many, many things can happen after a breakout or breakdown, which gets us back to my original response to you:
" So-o, what we need to do (as with ANY pattern) is to decide whether or not we like the pattern well enough to play it, which includes knowing where we would put our stop if the trade goes wrong.
Some patterns have "Fakeout/Breakouts" or "Fakeout/Breakdowns," then reverse and break out of the other side of the pattern, in which case we want to get out of the trade."
We all would like to know that if a pattern breaks out and a target goes IN PLAY, that it definitely will get MADE. That simply isn't the case. If the market were that simple, we'd all be billionaires ;)
Hope this helps. It's the best answer that I can give you.
Good analysis. However, if you draw the down trendline from 58.23 to 57.68, you would have noticed that the breakout occurs on the 60 minute chart. I bought FCX110521C57.5 call option on the breakout for 2.81 and sold this morning for 3.30 per your rule of gap and crap. I agreed with you that FCX is looking bearish, but no confirmation yet. Elliotician considers fifth wave ending diagonal a bearish pattern especially when volume is drying up on up days. Good trading.
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