Читать книгу Encyclopedia of Chart Patterns - Thomas N. Bulkowski - Страница 141

Ralph is a pattern trader with a measure of experience milking chart patterns for all they are worth. When he noticed what he thought was either a descending broadening wedge or a right‐angled descending broadening formation, he bought the stock. His order, placed at point C in Figure 10.7 (46.38), was just after the stock bounced off the lower trendline.

He monitored the stock closely and watched it move up the very next day, then ease lower.

Figure 10.7 This descending broadening pattern has an upward breakout. To compute the measure rule for upward breakouts, find the difference between the high and low in the formation, denoted by points A and B. Add the height to point A to get the upward breakout target price. It took almost 7 months for price to exceed the target. A small symmetrical triangle appears at point C.

“After a few days, I saw the symmetrical triangle form and got worried. Those things are unpredictable.” When the stock moved below the lower triangle trendline, Ralph sold the stock and closed out his trade at 46.50.

He cleared the image on the screen and looked at a chart without any lines or indicators. Just price.

Ralph smiled. “I made the right decision to sell because a partial rise,” such as where the triangle formed, “can predict an immediate downward breakout.”

Sure enough, the following day price dropped even further, tagging the broadening formation trendline again.

“Then the blasted thing bounced on me. Caught me by surprise. I wasn't in the stock then, but I like to think I made the right decision to sell. The thing went all the way back up to A, right where I hoped it would go during my trade. But nooo!”

Ralph took a small loss after factoring in commissions.

“I sold at the right time. The stock broke out downward from the triangle and could have continued a lot lower. In hindsight, though, I could have waited to see if the stock found support at the lower trendline. It was close enough that I could have tolerated the potential loss. In this case, all I had to do was wait no more than 3 days before price started climbing to A.”