As of 11/20/2024   Indus: 43,408 +139.53 +0.3%     Trans: 17,002 -26.31 -0.2%     Utils: 1,055 +1.25 +0.1%     Nasdaq: 18,966 -21.33 -0.1%     S&P 500: 5,917 +0.13 +0.0%	YTD  +15.2%    +6.9%    +19.7%    +26.3%    +24.1%	Targets    Overview: 11/12/2024     46,000 or 43,000 by 12/01/2024   18,000 or 16,600 by 12/01/2024   1,075 or 1,000 by 12/01/2024   20,000 or 18,400 by 12/01/2024   6,100 or 5,800 by 12/01/2024
Chart Pattern Indicator: on 11/18/24

As of 11/20/2024   Indus: 43,408 +139.53 +0.3%     Trans: 17,002 -26.31 -0.2%     Utils: 1,055 +1.25 +0.1%     Nasdaq: 18,966 -21.33 -0.1%     S&P 500: 5,917 +0.13 +0.0%	YTD  +15.2%    +6.9%    +19.7%    +26.3%    +24.1%
Targets    Overview: 11/12/2024     46,000 or 43,000 by 12/01/2024   18,000 or 16,600 by 12/01/2024   1,075 or 1,000 by 12/01/2024   20,000 or 18,400 by 12/01/2024   6,100 or 5,800 by 12/01/2024
Chart Pattern Indicator: on 11/18/24

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 Patterns, 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.

$ $ $

Predicting Trend Changes: The Triangle Apex

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.

More

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.

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

More

See Also

• Triangle apex and turning points. Price turns at apex 60% of the time.
• The dirt on ascending triangles.
• Descending triangles.
• Symmetrical triangles.
• 1-2-3 trend change. How do you know when the price trend is changing?
• Scaling out. Should you sell a portion of your position?
• Selling tips. Here's a dozen selling tips every trader should know.
• Trade review. Reviewing trades can lead to profits.
• Predicting the breakout direction: With some patterns, it's easy.

A psychiatrist is a person who will give you expensive answers that your wife will give you for free.