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Here's a classic progressive bullish triangle and wedge. The horizontal line
and first upward sloping trendline defined the initial bounds of the bullish
triangle. Note the deep penetration of the up sloping trendline with close
above the trendline - this is a signal to get long as stops just under the
sloping line are cleared. Next we touched the horizontal line again and came
back to a higher low below the first trendline - an initial sign of weakness
and opportunity to tighten the stop. The second (lower) upward sloping
trendline defines a new triangle and the down sloping line across the pivot
highs defines a wedge - note how the down sloping line provided steady
resistance. The general indication here is of a relatively weak market which
has difficulty overcoming even light resistance (the down sloping line).
This is not to say that we will not eventually get a breakout but is a sign
one should be monitoring stops carefully.
Edwards & McGee notes that triangles which progress into the point are very
prone to failure.
Earl
----- Original Message -----
From: Earl Adamy <eadamy@xxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Sent: Monday, May 17, 1999 7:49 AM
Subject: Re: June T-Bonds
> I have the 38% retracement of Friday's decline at 118^00 and the 100%
> projection using the L/H/L pivots on the 15 minute chart at 118^03. A
rally
> failure short of the 100% projection would be extremely negative,
signaling
> a high likelihood that Friday's low will not hold. Such a failure would be
> confirmed by taking out the 117^07 pivot low. As a guess, I would suspect
> that we need to rally to the 62% retracement area at 118^23 to have a
decent
> chance of holding Friday's low. Keep in mind that all of this is off
> Friday's action only while ignoring all which came before - an extremely
> limited view.
Attachment Converted: "c:\eudora\attach\USJUNE1.gif"
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