Rising wedge in SPX?

I just found this guy's bearish take via Google.

http://creditoptionspreads.com/2006/08/28/pressure-building-for-the-dow/

<i>8-28-06 "OK on the DOW, we had a bounce off the up trending support line on Friday and today. Now with the large gain today we are fast approaching the less angled line of resistance. We are still being squeezed into this Rising Wedge pattern. It is a Bearish sign and with the worst months typically coming up I would hold trades until confirmation of a direction. A break above 11,450 and maintaining there. Or a break below 11,225 and staying there, which is more likely since this is a bearish pattern."</i>
 
The volume action on the GOOG daily wedge I posted did not really confirm the pattern. If you look at the weekly GOOG chart I posted, I left the daily wedge up in purple and you can see it did not really fit the scenario well, but it still had four distinct reversals. The brown wedge on the weekly got taken out when the ascending triangle broke out to the upside, so, a new pattern could be drawn, which turned out to be another wedge, which did break down, and the price action formed a triangle, that has broken down and is in the process of a snap back. One process leads to another.

From my experience it is important to draw in each pattern as they present themselves, so you know where to start the next pattern to keep the logical progression of the price action in view. The weekly triangle breakdown signals trouble for the bulls on GOOG if it continues to play out. I have no idea whether it will or not, but if I was trading the stock, I would be inclined to short the next breakdown of a weekly bar.

It is best to deal with what is happening rather than to assume what will happen when a pattern forms, and this mindset keeps me from making too many bad risk to reward trades.

I enjoyed the exchange. It makes no difference to me whether anyone agrees with the work or not, but I just can not let slop go by without a comment expecially when my work gets butchered by an ignorant person. TA patterns have solid rules and tactics that will serve the alert trader well if they just settle down and use the method the way it is supposed to be used.

Patterns only provide bench marks for decisions. Once they form, they either complete to their target measurments, or they fail. In either case, it is easy to see what is happening to the trading plan fast, and adjustments can be made so damage is minimized. There is no need to have any expectations at all as to how they will turn out. This is how I have used them for years and it works for me. Thanks.
 
Quote from humble1:



From my experience it is important to draw in each pattern as they present themselves, so you know where to start the next pattern to keep the logical progression of the price action in view.

It is best to deal with what is happening rather than to assume what will happen when a pattern forms, and this mindset keeps me from making too many bad risk to reward trades.
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Correct on both comments. May I suggest, however, that one can easily fall into a trap of seeing what one knows whether it's really there or not. In other words, if one wants to see a head and shoulders, he can find one. Ditto with all other patterns.

Some of the wedges you've drawn aren't really wedges; they include too much space. They are more likely just simple rectangles, a notion confirmed by how price behaves when it exits each.

Your longer-term wedge, on the other hand, is "full", therefore correct. And it needn't be redrawn simply because there's a minor "breakout" at the top. This doesn't go anywhere and in itself is not important (except perhaps for the fact that it doesn't go anywhere).

Your symmetrical triangle or coil or whatever is also correct, again because it's "full".

Just something to consider.
 

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Quote from Lamont_C:

Correct on both comments. May I suggest, however, that one can easily fall into a trap of seeing what one knows whether it's really there or not. In other words, if one wants to see a head and shoulders, he can find one. Ditto with all other patterns.

Some of the wedges you've drawn aren't really wedges; they include too much space. They are more likely just simple rectangles, a notion confirmed by how price behaves when it exits each.

Your longer-term wedge, on the other hand, is "full", therefore correct. And it needn't be redrawn simply because there's a minor "breakout" at the top. This doesn't go anywhere and in itself is not important (except perhaps for the fact that it doesn't go anywhere).

Your symmetrical triangle or coil or whatever is also correct, again because it's "full".

Just something to consider.
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Thanks Lamont.
 
Quote from humble1:

Thanks Lamont.
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And one more thing to consider regarding your comment about shorting a weak weekly bar. The hesitancy about falling out of this triangle suggests that it may be a fake breakdown. This doesn't mean you shouldn't take the short, but you may want to wait for price to break below the last swing low prior to the "break" out of the triangle. And whichever you choose, have a plan in place to take the reverse just in case price decides it wants to resume the advance after all.
 
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