Using triangle patterns to tradeIf you dislike using fraction to do your charts as I have shown here , how about the world of shapes ?
One of the most common methods that traders used is triangle shapes pattern in charting.
So, in Haitong Securities, we can see that it has been on a down trend since it hit 27 in Apr 2015.
Now, it is reaching the apex of the triangle and you can see the price range that it is trading each day is also getting tighter and narrower.
OK, think of the price action as a spring coil trapped inside this triangle container! As it is being squeezed towards the end, it gets tighter and it has to breakout. The question is UP or down ?
Why stressed yourself to answer the question now when it is still far away from the apex ? Wait and wait some more.
Now, must it reach the apex of the triangle before it breaks out ? Of course not! Again, like fractions, using shapes like triangle patterns is a GUIDE not a certainty. It jolly well can break out today, tomorrow with a parabolic 90 degree. See the 3 orange circles!
Also, note, each time , the spikes get shorter and shorter as it comes closer to the apex of the triangle (being squeezed inside).
So, when friends asked you , can I buy Haitong Securities ? What do you say ?
Wait - that's my answer ( of coz yours can differ).
Why wait ?
Well, based on charts (not considering company fundamentals and other economic reasons), it has yet to break out of the triangle or break down the support line at 6.39. Since I am not keen to short stocks , that means I am buying only. And now would not be a good timing to go long.
So, does that mean we must wait till 2022 for the answer? Well, it is a GUIDE. It can be shorter or takes longer than that for the breakout. So, buying now will carry higher risks since you are paying at a higher price.
And is this triangle patterns in charting more powerful than fractions ? That is for you to decide....
