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Strategies & Market Trends : Trend Setters and Range Riders

MSFT 465.93

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Jan 23 9:30 AM EST

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To: NOW who wrote (18069)	5/21/2002 11:34:51 PM
From: Susan G	Read Replies (1) of 26752

you mean a breakout of a descending wedge may fail miserably? There was a really good example of that recently. Several in fact. A few early breakouts of the January downtrend line One was on April 1st. With some later highs, that trendline has moved on the charts so you no longer see that was a failed breakout of the downtrend line. But at the time that day was a breakout of the downtrend line. The most memorable was the Island reversal on the COMP that closed right on the line on 4/15. The next three days attempted breakouts, all three failed and the island broke down and back in the wedge we went for another month. Until last Tuesday, when we broke that same trendline AGAIN, it fueled shorts to cover, kept the rally going all week and stayed over it for 3 days and collapsed back into the same wedge today. Everyone had the trendline on their screen, the instant it broke through there was a huge surge, a short rally and a collapse back inside the descending wedge and a complete breakdown followed. Just like so many triple top or new high breakouts fail, longs pile on on the "breakout" and it's a bulltrap later. One of my favorite short setups <g>

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