Classic Geometric Patterns and Narrow Range Setups

"I think something is getting ready to happen. How about you?"


friday gave us DECK and CREE...NTMD been choppin' around in NR's for a few days, with upside bias in a weak market... (of course, ive burned myself so many times trading against last few weeks with a target price of 15, i've taken off my trading screen)

backman
 
Quote from marketsurfer:

what's your opinion on the pattern ??

surfer :)
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I try not to have one with consolidation plays. That way I am not talking myself into or out of a trade. I prefer to draw a couple of lines that I think represent support and resistance and let price action dictate. This is channel talk basically, which is right down your alley. If the width of the channel is wider than I am willing to accept for a stoploss/reversal, then I will use some other means to determine when I am wrong, ie., the high of the previous bar in the case of a short, etc. I am not willing to allow for much wiggle room initially, which might be to by detriment. As a trade progresses I am a little more free with retracement, but early on I am not.

What I really was trying to highlight was how BRCM, at least recently, manifested similar periods of consolidation which preceded a nice break. Unfortunately a number of those breaks occurred at the open. :(
 
Quote from inandlong:

Here's BA. As I have it drawn it is a pennant. The length is ~11 days. Today is day #5...

...Classically... one should expect a breakdown on good volume sometime during the next 4 days.
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This is for the guys who might be thinking, "Pfft, see.... patterns don't work. It was supposed to break down and instead it broke out. Hmmph, I missed another good trade."

C'mon, give me a show of hands.... you know who you are!

If there is one thing that I don't put any credence in it is the directional predictability of the patterns. Not because of my experience with the patterns, but moreso because I don't care.

The statistical advantage on direction is something in the vicinity of 52:48. Well okay, but I'm not going to make millions of trades; and if at the end of the year I have won only 4 more bets than I lost, then I didn't have a very good year. All I care about is finding stocks in consolidation and being there when they break. What do I care which direction it is breaking?

On the other hand, this is day #7 of an 11-12 day pattern, which puts it squarely in between 50-67% of the way thru the pattern... a classic break.
 

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GM daily chart. This is a 28 day pattern, today is day #14. As I have it drawn this is a symmetrical triangle. The characterisitics of a symmetrical triangle can be reviewed quickly at chartpatterns.com.

Don't forget to look at news and check the next longer and shorter time frames. There is plenty of time to do so. If not, I suspect there will be another trade in another stock.
 

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Here are some interesting looking stocks that were NRID7's yesterday:

ANPI, MDCO, ENDP.

ENDP looks somewhat like the CSCO chart after it gapped lower. The other two are self-explanatory.

Check the news, and review the next longer and shorter time frames.
 
Hey inandlong. Aren't nr7s best traded on wide ranging markets? That is what my tests show. Why not focus on other markets like currencies which are displaying wider ranges. Just a suggestion.
 
Hey put', welcome to ET and thanks for your in *put*. :)

You are absolutely right and you make a very important point not just about the profit potential of NRID7's, but about EVERY consolidation pattern. Using currencies as the subject example is perfect.

Thanks for the contribution.
 
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