Rectangles and Triangles and Wedges, oh my!
When a breakout occurs, we always look ahead for the next breakout opportunity. Breakouts happen on all time frames and so there are many opportunities. Identifying when and where breakouts can occur takes some practice, but they are often found forming shapes like rectangles and triangles. Triangles are by far the most profitable of the two patterns – and we see a large number of those patterns showing up today.
Cardano’s chart shows a triangle within a triangle. The word wedge is often used to describe a triangle that is pointing in a certain direction. A rising wedge is an upwards pointing triangle that has a behavior of prices selling off as it approaches the capstone of a triangle. A falling wedge is a downwards pointing triangle that has a behavior of prices rising at the ends. In all triangles, it is common to see volume drop as it gets tighter and tighter. Cardano is showing what some may call a falling wedge within a symmetrical wedge. Symmetrical triangle patterns are viewed as neutral, but some expert analysts have given a symmetrical triangle a more bullish bias percentage wise. The breakout zone for bullish sentiment is a breakout above the 0.10 zone, and a bearish scenario is a break below the 0.88 zone.
Bitcoin is also showing a symmetrical triangle pattern. It’s breakout zone is going to be compounded by the value area of 6300, which is an exact center harmonic value. The bullish breakout zone for Bitcoin is above the 6400 value area. The bearish breakout zone is below the 6140 value area.
EOS is showing couple options here. Depending on the analyst, one may see this pattern as an extremely bullish signal, or an extremely bearish signal. A sustained break above and hold of the 7.00 value area would be a strong signal of a bullish reversal. The inverse scenario is a break below the 3.00 zone.
ETC is showing whats often called a megaphone pattern. This is a fun type of pattern which can cause more than a few headaches if you don’t watch it. For a bullish bias, the price action we see is good – often for this pattern, we would see a more shallow pullback followed by a return to the bottom of the triangle before making another leg down. In this case, we see a very responsive bounce and if we sustain that bounce and rise higher, we could very well see a move well beyond the 24.80 zone.