A Rising Triangle

[TopstepTrader 10]

As you can see from the chart below, the S&P mini's had a big up day on Friday, August 3, and in the trading week since then (last week), a rising triangle has appeared. Rising triangles are generally considered bullish, because, while sellers continue selling at the same Resistance level (about 140300), buyers are buying before it goes all the way back down to Support. This shows that buyers want to buy early so as not to miss getting the contracts.

 

You can think of this like a battlefield between Buyers and Sellers. Buyers are infantry who are gradually advancing but sellers are holding their ground at a certain area.

 

 

This is not the best example of a rising triangle, because the support line is barely advancing over 5 trading days. Still, it is rising. There is something you should know. For the last ten weeks, every single trend in the S&P mini's, all 9 of them, lasted between 3-6 trading days. This past Friday, August 10, was 6 up days in a row, signaling a strong chance for a reversal. In addition, we have reached Resistance once again.

 

I don't know if the buyers or sellers will overpower the other and take us out of this range, but it will probably happen soon. I'm not sure which direction it will be, but I want to trade in whichever direction it goes. In other words, I want the market to show me which way it is going and then enter a position in the same direction. I will keep a very close eye on this market starting Sunday night.

 

Many Profitable Returns,

 

Trader Gregg

 

Mr. Killpack has been studying the markets since 1988. He has read over 40,000 pages about trading and investing strategies, fundamental and technical analysis, and related topics. He began day trading in 2001.

[TheNegotiator 13]

As you can see from the chart below, the S&P mini's had a big up day on Friday, August 3, and in the trading week since then (last week), a rising triangle has appeared. Rising triangles are generally considered bullish, because, while sellers continue selling at the same Resistance level (about 140300), buyers are buying before it goes all the way back down to Support. This shows that buyers want to buy early so as not to miss getting the contracts.

 

You can think of this like a battlefield between Buyers and Sellers. Buyers are infantry who are gradually advancing but sellers are holding their ground at a certain area.

 

 

This is not the best example of a rising triangle, because the support line is barely advancing over 5 trading days. Still, it is rising. There is something you should know. For the last ten weeks, every single trend in the S&P mini's, all 9 of them, lasted between 3-6 trading days. This past Friday, August 10, was 6 up days in a row, signaling a strong chance for a reversal. In addition, we have reached Resistance once again.

 

I don't know if the buyers or sellers will overpower the other and take us out of this range, but it will probably happen soon. I'm not sure which direction it will be, but I want to trade in whichever direction it goes. In other words, I want the market to show me which way it is going and then enter a position in the same direction. I will keep a very close eye on this market starting Sunday night.

 

Many Profitable Returns,

 

Trader Gregg

 

Mr. Killpack has been studying the markets since 1988. He has read over 40,000 pages about trading and investing strategies, fundamental and technical analysis, and related topics. He began day trading in 2001.

 

Everything and nothing can work in technical analysis with or without the right context. In this case, I'd be asking who exactly is doing the buying. Is it guys who are going to hold come hell or high water or is it the few who aren't on holiday, happy to keep buying until there's a break lower? Of course, the trouble is that when markets are grinding higher like this there are always traders and analysts who are calling the top. That's why there's fuel for further moves up until every seller has capitulated and the reversal begins. Remember that a failed breakout (i.e. a breakout then reversal back) can be powerful in the opposite direction.

 

Given that this article was posted a week or so late (cough), we have a bit more to go on today. The market has indeed broken a little higher followed by a tight sideways range and further break higher with the reversal coming straight from that break higher. Whether or not this is a capitulation of sellers followed by a reversal remains to be seen. But we have Fed minutes today and the market is increasingly wary of QE3 not happening right now (along with unresolved issues in Europe). It looks like the sell-off was long liquidation to begin with at least and I'd be watching closely for signs of support or lack thereof, at the 1400 area. Slap bang in the middle of your rising triangle. It's also important to note that the RTH low was 1 tick short of the balance high at 1407.75 (8/7-8/15). But as always, ANYTHING CAN HAPPEN :missy: