TA - Textbook triangle breakout

[GreatPig]

Just thought I'd post this textbook example (at least going by the Edwards & Magee textbook) of a triangle breakout.

After the initial breakout, prices dipped back inside then rose to just above the target price before starting to ease again.

Not often that stocks follow the "rules" this closely

Cheers,
GP

 

[tech/a]

True its not often a stock will "follow the rules"

Infact extensive testing has shown that patterns are no better than 50/50 over a long term for reliability as an entry signal.

Whether that be
Triangles,Flags,Pennets,Diamonds,Head and Shoulder patterns.Double Tops Triple Tops (Or bottoms),Plus the whole gambit of Candlestick patterns.

They are a setup,an extension of price action over time.
They can and do succeed and they can and do fail.

tech

 

[RichKid]

That's why I think 'tactics' (the second part of Edwards and McGee) is VERY important. Maybe even more important than the first part of the book. It's the managment part basically, management of risk. After all we are dealing with chance or probability.

I noticed in the breakout chart that volume wasn't perfect, was a premature run at the top trendline, at the tail end of the first fall in volume. Ideally volume falls uniformly and then the breakout occurs. Shows how TA is not an exact science, more like an art.