My first post here, though Ive been holding firm since the early days.
Im no chartist, I only have a basic understanding though the topic has always fascinated me in so far as it reflects a companys progress. And so I wanted to focus the discussion on the pattern thats been unfolding since WBT price reached all time high at just under $9.
The way I see it we are in a right angle descending triangle that is fast approaching a break out point that would probably reflect a make or break development for the company. The question is which way will it break?
If you believe like I do that signing up a tier 1 fab and/or customer is imminent, then you would expect it to break on the upside and you can almost visualise the current triangle to appear as a pennant in a future, longer term chart with the price at that future point being multiples of what it is today.
If on the other hand you see the company as a long-term failure i.e. unable to gain any traction in the market then you would expect it to break on the downside severely, since the height of the chart implies a downside target of under 50 cents.
The above are extreme scenarios of how the break out could play out and perhaps not unreasonable given that the pattern has taken around half a year to form and the reliability of such patterns?
Other questions I have
- are such breakouts always in response to major announcements from the company or can they also happen in the absence of any announcement? Can it break down purely because the market is tired of waiting for news that it was expecting but is overdue?
- What is the likelihood of a false breakout? And what factors could cause that? A break down on no announcement only to reverse and break up on a positive announcement?
- Is a descending triangle bearish or bullish when it occurs in an uptrend, as is the case for WBT? Doing a google search will yield examples of both cases though I came across references to Tom Bulkowski who sees it as predominantly bullish https://www.warriortrading.com/descending-triangle-pattern/
“The Descending Triangle Pattern is an excellent example of different results in different markets. In Forex, the Descending Triangle Pattern is an overwhelmingly bearish pattern – it is one of the most sought out shorting patterns in Forex.
For the stock market, Bulkowski has a total inverse performance to Forex for the descending triangle.
In fact, the performance rate for the descending triangle pattern on a break higher is an astonishing 55 out of 59.
The bearish performance rating in the stock market is a dismal and laughable 9 out of 57.”
I would be interested to hear others point of view especially those expert chartists of which we have a couple on here such as Insected and Darkstone. I for one appreciate your charts; lots to learn
(20min delay)