Open trading account 
The first chart pattern I learnt about was the triangle. An important thing to understand about trading is that complex systems do not follow simple rules exactly. This isn't physics, where the equations of general relativity and quantum electro dynamics have been verified to 11 and 14 significant figures respectively. This is psychology, where people behave in ways which are at best partially predictable and highly complex, but on a massive scale where it is only slight hyperbole to say that we are predicting the rise and fall of nations.
Complex systems do not follow simple rules precisely. This is worth repeating. But simple rules do guide their behaviour, even if all the different causes of market movements are tied up like a colossal Gordian knot.
Back to the initial point.
Triangles in their pure form do exist. But the underlying idea of a triangle is that without external impulse, the market bounces around like a spring or pendulum, but the bounces dampen and each bounce is smaller. This, ironically, is physics, and if no-one poked the spring then you would get a perfect triangle.
Markets are full of people poking the metaphorical spring, and so you end up with this:
This is not a triangle, its a pentagon. But its close enough. The essential fundamental nature of the triangle pattern is oscillation, with each bounce getting smaller and having lower volume. For some reason here the dampening seems to have accelerated towards the end.
Three conventional pieces of wisdom apply to the triangle pattern. One is that it is a continuation pattern - it shows uncertainty and under uncertainty the system will probably continue to behave in the same manner it was. Secondly, that the direction the triangle points in is the direction the instrument will move when the trendlines break. Thirdly, whichever direction it breaks in, it will continue to move for some time.
The recent trend has been down. The pattern is moving down, with the most recent peak being considerably lower than the previous one, showing a sudden collapse of conviction of the bulls. This is a strong indicator that we could be heading for a sharp drop.
Markets are fractal, and on a longer timescale a more obvious triangle is developing. In this case, the longer-term trend is up, while the triangle is pointing down, so the two pieces of wisdom disagree. Seems that 116 is a good area to take profit on a short, but after that is less clear.
Complex systems do not follow simple rules precisely. This is worth repeating. But simple rules do guide their behaviour, even if all the different causes of market movements are tied up like a colossal Gordian knot.
Back to the initial point.
Triangles in their pure form do exist. But the underlying idea of a triangle is that without external impulse, the market bounces around like a spring or pendulum, but the bounces dampen and each bounce is smaller. This, ironically, is physics, and if no-one poked the spring then you would get a perfect triangle.
Markets are full of people poking the metaphorical spring, and so you end up with this:
This is not a triangle, its a pentagon. But its close enough. The essential fundamental nature of the triangle pattern is oscillation, with each bounce getting smaller and having lower volume. For some reason here the dampening seems to have accelerated towards the end.
Three conventional pieces of wisdom apply to the triangle pattern. One is that it is a continuation pattern - it shows uncertainty and under uncertainty the system will probably continue to behave in the same manner it was. Secondly, that the direction the triangle points in is the direction the instrument will move when the trendlines break. Thirdly, whichever direction it breaks in, it will continue to move for some time.
The recent trend has been down. The pattern is moving down, with the most recent peak being considerably lower than the previous one, showing a sudden collapse of conviction of the bulls. This is a strong indicator that we could be heading for a sharp drop.
Markets are fractal, and on a longer timescale a more obvious triangle is developing. In this case, the longer-term trend is up, while the triangle is pointing down, so the two pieces of wisdom disagree. Seems that 116 is a good area to take profit on a short, but after that is less clear.