There is little doubt that most stock indices are in the middle of a Triangle, technically speaking (the daily chart above-click to enlarge-shows the Nasdaq ETF, QQQQ).
And no class of technicians has studied and written about triangles as extensively as Elliotticians. I personally rarely use Elliott Wave analysis for reasons of preference and experience. It is a very seductive intellectual construct which unfortunately, because of its elegance, can lead many a trader (guilty as charged) to trade the wave and not the market.
However, it can also, when not abused, improve one's visual instincts in chart reading.
Robert Prechter, the undisputed EW guru has this to say about triangles:
"The single biggest mistake that Elliotticians make with regard to a developing triangle is calling an end to it too soon. In a typical plot of market prices, the boundary lines of a triangle rarely contract at a rapid rate. When price boundaries do appear to be contracting rapidly, the triangle is usually only in mid-formation, not at its end.[...]
Generally speaking, if an analyst expects a triangle to undergo a "sideways" appearance rather than a rapid contraction, he will more often be correct."
A good thing to keep in mind at this particular juncture.
2 comments:
Triangles are all the rage lately and everyone has an opinion. Based on your analysis, which way do you think we break in the QQQQ and whats the approx target once the break occurs.
I read your blog daily and like your content enough to have your link on my blog, but with this post you left me hangin.
Thanks,
technicalinsights.blogspot.com
Thanks for your comment, a.f.a.o.
I'll definely check out your blog.
And I'll try to be a little more productive, posting-wise, so you'll actually have something new to read each and every day.
As far as the triangles, all I was trying to say was that they often take a lot longer to resolve than most of us would like. My chips are on a downside resolution as both theory and my intuition tell me.
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