To: Chris who wrote (22957 ) 4/28/2000 9:58:00 PM From: Robert Graham Read Replies (2) | Respond to
Triangles are very interesting. For instance, in the SPOOs, when price breaks out from a triangular formation, many times after reaching a nearby price target, price can reverse and move a distance in the other direction. And in many cases price will move further than it did on its original breakout. That is why I play the anticipated price reversal *after* price breaks out. Another reason is that it is sometimes very difficult to determine the direction of the initial breakout. Also flag patterns defined on a horizontal line with no "up" or "down" orientation also behave in the same way. I suspect this may be true of other types of patterns. Price when it reverses may turn into a large whipsaw or actually as indicated above continue in the opposite direction for a nice trade that eventually faded the initial breakout. Now if price touches an important S or R after its breakout and then looks to be reversing again, particularly if this is its original breakout point, then this can be a very good play in the original direction. So one has to be careful, observe price action carefully, and be aware of the kind of market they are currently trading in. But the initial price reversal is still usually good for a few points. That is the more reliable part of the price movement.
