expanding triangle

tombaitz

What is the future probability of an expanding triangle with horizontal bottoms but rising highs? That was the pattern of the SP500 over the past week or so - today the answer is clear - we broke the bottom horizontal line, now we are down - but does anyone has knowledge of a predictable evolutionary pattern when such a reverse wedge is in the formative stages?

markd

Hi Tom, not a pattern guy myself - I just can never see them. But if you are into patterns and haven't visited this site, you may find it interesting and useful:

thepatternsite.com/

Kevo

To my knowledge, the academics do not have an expanding triangle chart pattern. Triangles converge with time. They do not expand. Please point me somewhere that shows otherwise.

I do not see the pattern you describe except for on the intraday chart, which carries less weight. If you include several more previous days, this could be considered a channel, or period of consolidation, or indecision, or there could be overhead resistance. The longer the consolidation, the more likely it will fail.

tombaitz

We do have expanding megaphone patterns. It just appeared to me that in the last two weeks the intraday lows on the SP500 remained quite solid at the 1990 level, while the intraday highs are showing an upward slant from 2001 to 2011with a quite well defined line - that is why I was curious to see if there is any known recognition of not a megaphone pattern, but a pattern where we still have an expanding triangle pattern with one of the trend lines (in this case the bottom one) being horizontal, instead of diverging in a contrary direction in contrast to the upward slant of the upper trend line. Of course, this not a channel - but now that we still have continued to bounce back from the horizontal bottom trend line, do we anticipate the upward trend to test the ascending line again? Tom

Kevo

The Megaphone or Broadening Top/Bottom Chart Pattern sounds a lot better. I have read about this pattern in the past, but have since forgotten about it because it is not in SCC ChartSchool. "Expanding Triangle" is a poor choice of terminology because it is confusing. Triangles are a different class of Chart Patterns. Using the term Megaphone would be a clue to the reader that they may be unfamiliar with this pattern and that it is not of the Triangle type. Thanks for mentioning the Megaphone pattern.

I only see a Megaphone pattern on the S&P 500 intraday chart. I assume this is what you a referring to. I do not see the horizontal bottom trend line with a rising upper trend line.

For argument's sake, if that pattern was visible, it would not be a Megaphone pattern. I am not sure what it would be. To me, a pattern that has a horizontal bottom trend line would suggest there is support at that level. If the upper trend line is rising, then maybe that would be bullish.

tombaitz

Thanks for great input - that was my impression too - but there seems to be a rather horizontal support line at around 1990 on the intraday chart for the past 2 weeks (lows of 1991.72 on Aug 25, 1990.52 on Aug 28 and 1990.10 on Sept 5) - I guess we need to break that line to invalidate an assumed rising trend (with the pre-market low on the futures on Friday, Sept 5, I thought we are breaking the bottom line). I wasn't sure what to call it - as it is not a pattern that I have seen described - a variant of megaphone most likely, but with a more horizontal support line - that is why I am asking for input, as I have not seen it described before. The rising trendline from an intraday high of 2001.95 on August 25 to 2011.17 on September 4 is clearly a rising line - I did call it an expanding triangle, but the terminology may well be wrong - a variant of megaphone is probably a better term. T.B.