Chart pattern size?

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04-29-2016,
AilaJelm

Chart pattern size?

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Hi,

I see most picks here rely on chart patterns with various indicators being used to confirm breaks. I'm new to trading and can't figure out how the more experienced traders here figure out the size of their legitimate chart patterns.

For example, RIMM, which one of these would be a legitimate Ascending triangle and why?
Tri. 1
http://www.freeimagehosting.net/uploads/f2bb093831.png

Tri. 2
http://www.freeimagehosting.net/uploads/c16ad546ab.png

Tri. 3
http://www.freeimagehosting.net/uploads/b83ddf06e8.png

Your actions based off of the three variations above could be vastly different for a particular strategy, so how are you guys so sure that the pattern you draw has a meaning in terms of the price action of the stock?

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05-01-2016,
Akascharom

Good question, you're asking about the clarity of a pattern.

You want to see solid touches/bounces off of the support/resistance lines.

Google up on it, but you'd typically like to see two hits on each line with the possible breakout 2/3 of the way thru the formation before the apex (where the lines converge to a point).

You'd also like to see declining volume as the pattern forms.
05-02-2016,
alanane4

I had RIMM as one of my first picks for the site, and I didn't annotate the asc. triangle on there as I did not see one that was apparent. Rather, I believe it would move up and breakout thru predetermined resistance levels. And also, to hold support levels.

What you're showing on your charts are leaning more towards wedges, and not asc. triangles. (Maybe the first one though.)
05-03-2016,
Arthurdelt

One thing you will soon realize is that chart reading is an art and not an exact science. Different chartists will find different patterns in the same chart.

Regarding chart sizes, they pretty much depend on your style of trading. For example, a day trader will be looking at 1 min charts while a swing trader will be looking for patterns in daily charts.

Regarding ascending triangle, I would look for a decrease in volume accompanying the development of the triangle as the confirmation of the pattern. Also, the more number of times the price bounces off the trend lines, the stronger is the pattern in the making.
05-05-2016,
Arthurzen

Exactly, there's always different ways to interpret a chart.

You can annotate it one way to make it look bullish, and then another way to make it bearish. (Now I'm just confusing you..:lol: )