by BlackCat » Wed Feb 17, 2010 9:48 pm
For the bigger pattern, I think anyone following TA would have sold (or mabye even short) as it gapped below the 2.10 neckline on 5th Feb. I would have. So only the 'serious' holders (probably FA people) are left.
So if you were bearish, as in your example, and you got stopped out by the last bar today, you would have to cut your losses. The chart would have broken your expectations... and alot of other peoples. I'm wondering if you could then turn around and go long?
I don't think I'm second guessing... the pattern was broken, by the last bar today.
Got the idea from a book 'Getting started in chart patterns' by Thomas Bulkowski, with a chapter called 'Busted patterns'. I think in Schwager's "Stock Market Wizards", Mark Minervini also alludes to this. Something like: the failure of a pattern may be part of a wider pattern.
I wait until there is money lying in the corner, and all I have to do is go over there and pick it up.
Jim Rogers