Zee TV - Contracting for a Breakout!
After consolidating for over three months, ZEE TV seems to have completed the formation of a symmetrical or contracting triangle pattern.
The symmetrical triangle is best described as a continuation pattern, a formation that represents a slowdown or consolidation in a trend whether an up or downtrend.
Symmetrical Triangles are areas of indecision. The market pauses and the direction is questioned. Typically, the forces of buyers and sellers are equal.
ZEE TV is forming a typical symmetrical triangle pattern
The symmetrical triangle, which can also be referred to as a coil, usually forms during a trend as a continuation pattern. The pattern contains at least two lower highs and two higher lows. When these points are connected, the lines converge as they are extended and the symmetrical triangle takes shape. You could also think of it as a contracting wedge, wide at the beginning and narrowing over time.
Why is the symmetrical triangle pattern important?
A symmetrical triangle pattern is relatively easy to identify. In addition, triangle patterns can be quite reliable to trade with very low failure rates. There is a caution concerning trading these patterns. A triangle pattern can be either continuation or reversal patterns. Typically, they are continuation patterns. To achieve the reliability for which the triangle is well known, technical analysts advise waiting for a clear breakout of one of the trendlines defining the triangle.
Triangle patterns are usually susceptible to definite and dependable analysis, with the proviso that the investor must wait for a reliable, as opposed to a premature, breakout. The failure rate for triangles drops significantly if the investor waits for a valid breakout and, once that breakout occurs, the pattern proves strongly reliable.
Is volume important in a symmetrical triangle pattern?
Volume is an important factor to consider when determining whether a formation is a true triangle. Typically, volume follows a reliable pattern: volume should diminish as the price swings back and forth between an increasingly narrow range of highs and lows. However, when breakout occurs, there should be a noticeable increase in volume. If this volume picture is not clear, investors should be cautious about whether the pattern is a true triangle.
This traditional volume pattern develops because of investor sentiment during the creation of a triangle. Investors are uncertain. This uncertainty means that they are buying and selling sooner, which translates into a narrowing of the highs and lows, creating the "coil" shape, indicative of the triangle . Because investors are uncertain, many are holding on to their stocks, awaiting the market's next move. When breakout finally does occur, there's a surge in market activity because investors are finally certain enough about the direction of the market to release their pent-up supply or demand.
See attached chart of ZEE TV forming a symmetrical triangle pattern.
Have any questions?? Please post them here!
Please visit this forum tomorrow for an update on the direction of breakout and trading signal.
After consolidating for over three months, ZEE TV seems to have completed the formation of a symmetrical or contracting triangle pattern.
The symmetrical triangle is best described as a continuation pattern, a formation that represents a slowdown or consolidation in a trend whether an up or downtrend.
Symmetrical Triangles are areas of indecision. The market pauses and the direction is questioned. Typically, the forces of buyers and sellers are equal.
ZEE TV is forming a typical symmetrical triangle pattern
The symmetrical triangle, which can also be referred to as a coil, usually forms during a trend as a continuation pattern. The pattern contains at least two lower highs and two higher lows. When these points are connected, the lines converge as they are extended and the symmetrical triangle takes shape. You could also think of it as a contracting wedge, wide at the beginning and narrowing over time.
Why is the symmetrical triangle pattern important?
A symmetrical triangle pattern is relatively easy to identify. In addition, triangle patterns can be quite reliable to trade with very low failure rates. There is a caution concerning trading these patterns. A triangle pattern can be either continuation or reversal patterns. Typically, they are continuation patterns. To achieve the reliability for which the triangle is well known, technical analysts advise waiting for a clear breakout of one of the trendlines defining the triangle.
Triangle patterns are usually susceptible to definite and dependable analysis, with the proviso that the investor must wait for a reliable, as opposed to a premature, breakout. The failure rate for triangles drops significantly if the investor waits for a valid breakout and, once that breakout occurs, the pattern proves strongly reliable.
Is volume important in a symmetrical triangle pattern?
Volume is an important factor to consider when determining whether a formation is a true triangle. Typically, volume follows a reliable pattern: volume should diminish as the price swings back and forth between an increasingly narrow range of highs and lows. However, when breakout occurs, there should be a noticeable increase in volume. If this volume picture is not clear, investors should be cautious about whether the pattern is a true triangle.
This traditional volume pattern develops because of investor sentiment during the creation of a triangle. Investors are uncertain. This uncertainty means that they are buying and selling sooner, which translates into a narrowing of the highs and lows, creating the "coil" shape, indicative of the triangle . Because investors are uncertain, many are holding on to their stocks, awaiting the market's next move. When breakout finally does occur, there's a surge in market activity because investors are finally certain enough about the direction of the market to release their pent-up supply or demand.
See attached chart of ZEE TV forming a symmetrical triangle pattern.
Have any questions?? Please post them here!
Please visit this forum tomorrow for an update on the direction of breakout and trading signal.
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