Clicking on my books below takes you to Amazon.com. At no cost to you, they pay for the referral and that helps support this site.

Bulkowski’s Blog Archive: ^DJT

Blog Posting: February 7, 2008, Transports: Descending Broadening Wedge (^DJT)

The chart shows the Dow transports on the weekly scale with two red lines outlining a descending broadening wedge. A full 79% of stocks showing a descending broadening wedge breakout upward, so maybe there is hope for the transports after all. If they do, then the target price would be the top of the wedge, or about 5,000.

Another possibility is that the transports will do a partial decline after touching the top trendline. In that pattern, price drops, curls around, and then busts out the top of the pattern. A descending broadening wedge has a partial decline 62% of the time and it correctly predicts an upward breakout 87% of the time in a bull market.

Aftermath

The transport average decided to do the partial decline thing. That occurred at A when price dropped down from the top trendline but did not come close to the lower trendline before reversing direction and punching through the top trendline. A breakout occurred when price closed above the top trendline at B.