AAACCKKKK! I should NOT try to think before my first gallon of coffee!
Previous Minor High - Low at Start of Formation = Decline
964 - 928 = 36 NOT 56 AS I MISTAKENLY SAID BEFORE!
ARRGH...
So, subtract 36 from the point at which the formation breaks down, 956, and you get 920. So, the target is 920, as you said.
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The mistake I had been making was to use the formula for triangles instead of the formula for flags and pennants.
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Here's something I finally figured out yesterday which should make the flag/pennant much more clear, conceptually speaking.
-- A flag or pennant is just a short consolidation phase during a sharp decline or advance. Murphy describes them as "flying at half-mast." That is, they come right in the middle of the decline. The decline/advance after the flag or pennant is going to be the SAME height as the decline or advance just prior to the flag or pennant.
In other words, a flag or pennant is the middle wave of a three wave sequence.
Wave A = sharp advance or decline
Wave B (the flag or pennant) = consolidation
Wave C = sharp advance/decline EQUAL in height to Wave A
So, the target is really just determined by the angle of the flag or pennant, Wave B. If Wave B is angled upward, the target will not be all that low. If Wave B is horizontal, then Waves A & C will look like one continuous decline with a flat spot in the middle. If Wave B angles downward, then Waves A - C will look like a lightning bolt.
I drew some examples on the right side this chart, but StockCharts messed them up in translation. But my notes on yesterday's formation should make this clear. stockcharts.com[g,a]geclynay[d3][pf][j5142917,y]&listNum=16
As to why some people measure a flag or pennant like a rectangle, I can only guess that, like me, they don't go back to the books often enough. <gg> |
