Page 189 - DCOM504_SECURITY_ANALYSIS_AND_PORTFOLIO_MANAGEMENT

Security Analysis and Portfolio Management

Notes
Figure 6.11

The symmetrical triangle is a pattern in which two trendlines converge toward each other.
This pattern is neutral in that a breakout to the upside or downside is a confirmation of a
trend in that direction. In an ascending triangle, the upper trendline is flat, while the
bottom trendline is upward sloping. This is generally thought of as a bullish pattern in
which chartists look for an upside breakout. In a descending triangle, the lower trendline
is flat and the upper trendline is descending. This is generally seen as a bearish pattern
where chartists look for a downside breakout.
6. Wedge: The wedge chart pattern can be either a continuation or reversal pattern. It is
similar to a symmetrical triangle except that the wedge pattern slants in an upward or
downward direction, while the symmetrical triangle generally shows a sideways
movement. The other difference is that wedges tend to form over longer periods, usually
between three and six months.
Figure 6.12

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