DP Weekly Wrap: Expect Breakdown from Rising Wedge

Jan 11 23:01 2019 Print This Article

One of my favorite chart patterns is the wedge. Rising or falling, they arrive frequently and usually resolve predictably. On this chart there happen to be two rising wedge formations. The first one led us into the bull market top in September/October of 2018. It resolved downward, as expected, but I have to admit that the massive downside follow through was atypical to say the least. The current rising wedge off the December low should also resolve downward. That is not guaranteed, but, since we're in a bear market, it is more likely. Once it breaks down, the "prediction" is fulfilled, and I am not aware of any rule-of-thumb techniques to project how far down price is likely to go, but, again, the bear market implies that there will be more downside.

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