As of 03/18/2024
  Indus: 38,790 +75.66 +0.2%  
  Trans: 15,418 -81.05 -0.5%  
  Utils: 853 +3.06 +0.4%  
  Nasdaq: 16,103 +130.28 +0.8%  
  S&P 500: 5,149 +32.33 +0.6%  
YTD
 +2.9%  
-3.0%  
-3.2%  
 +7.3%  
 +8.0%  
  Targets    Overview: 03/13/2024  
  Down arrow38,000 or 39,350 by 04/01/2024
  Up arrow16,300 or 15,350 by 04/01/2024
  Up arrow885 or 830 by 04/01/2024
  Down arrow15,200 or 16,600 by 04/01/2024
  Up arrow5,250 or 5,000 by 04/01/2024
As of 03/18/2024
  Indus: 38,790 +75.66 +0.2%  
  Trans: 15,418 -81.05 -0.5%  
  Utils: 853 +3.06 +0.4%  
  Nasdaq: 16,103 +130.28 +0.8%  
  S&P 500: 5,149 +32.33 +0.6%  
YTD
 +2.9%  
-3.0%  
-3.2%  
 +7.3%  
 +8.0%  
  Targets    Overview: 03/13/2024  
  Down arrow38,000 or 39,350 by 04/01/2024
  Up arrow16,300 or 15,350 by 04/01/2024
  Up arrow885 or 830 by 04/01/2024
  Down arrow15,200 or 16,600 by 04/01/2024
  Up arrow5,250 or 5,000 by 04/01/2024

Bulkowski on Predicting Trend Changes

Predicting Trend Changes: Summary

This article discusses how to use the apex of a triangle to predict a short-term change in the price trend.

$ $ $

My book, Visual Guide to Chart PatternsVisual Guide to Chart Patterns book., shown on the left, has a complete chapter on apex turning points, starting on page 289.

If you click on the above link and then buy the book (or anything) while at Amazon.com, the referral will help support this site. Thanks.

-- Tom Bulkowski

$ $ $

Predicting Trend Changes: The Triangle Apex

The chart shows the triangle apex matching the minor high.

In the book, Elliott Wave Principle , authors Frost and Prechter write that the market often turns when price reaches the apex of a triangle.

I tested this using three methods and found it to be true in all cases. Price reaches a minor high or minor low 75% of the time within a few days of the triangle apex. Price turns from down to up or up to down 60% of the time.

As an example, the chart shows a symmetrical triangle on the daily scale. If you draw the two trendlines carefully along the top and bottom of the pattern, they converge at the triangle apex sometime into the future. Expect price to turn near the date where the trendlines join.

In this example, the triangle apex is at A and the market turns at B. Clearly the turn is not a lasting one, but price drops by 8%. It is not a trend change as much as it is a pause in the upward price trend.

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The chart shows an ascending triangle in Energy Conversion Devices (ENER) on the daily scale.

Predicting Trend Changes: Ascending Triangles

Not only does the triangle apex signal a reversal in symmetrical triangles, but other types of triangle patterns as well.

Outlined by two red trendlines is an ascending triangle shown in Energy Conversion Devices (ENER) on the daily scale.

The triangle apex nears the date at A, right at the formation of a minor high. Price drops from a high of $21.27 to a low of $11.83 (not shown), a plunge of 44% in just over 2 months.

The chart shows a descending triangle in Boeing (BA) on the daily scale

Predicting Trend Changes: Descending Triangles

Pictured is a chart of Boeing (BA), on the daily scale. Outlined in red trendlines is a descending triangle.

Price breaks out downward from the triangle and crashes like an airplane out of gas.

In March, when the general market began a recovery, so too did Boeing.

Price takes off, rising to A in a stair-step move higher. At A, price reaches a high of $38.68 before dropping to B, $34.21, a decline of almost 12%.

-- Thomas Bulkowski

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See Also

 

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