4DS chart, page-27

Hi @Arrr! – I’m not a chart pattern trader but I’ve been told time and time again that you can’t ignore these sort of patterns, especially on higher time frames, i.e. weekly charts. So I try to keep an eye out for them in the stocks I hold.

The pattern you have drawn is a descending wedge pattern. It is a bullish continuation pattern if it occurs in an uptrend. To consider the longer term trend of the 4DS SP as being up would be a big call at the moment especially as the 50MA has crossed below the 200MA. The violet line on my chart (see below) seems to be a valid downward sloping resistance line as the SP has hit this line more than 3 times (7 by my count). The red line on the chart, the lower line of your descending wedge pattern, has only 2 SP hits, so whether or not it’s a valid line of support is questionable. If the pattern plays out as would be expected a confirmed break of the upper violet line should see about a 4c rally in the SP. Haven’t found many chartists who have a high regard for this type of pattern though.

A more reliable pattern is the descending triangle pattern. The horizontal blue line and the down sloping violet line show the pattern on the chart. Apparently there is about a 70% probability of a downward break of this pattern. The other thing to note is that the breakout of the pattern should occur in the last third of the pattern. The closer the SP gets to the end of the pattern the weaker the price action on any breakout. This pattern seemed to perform as expected on the 4DS chart.

So I am not to sure whether I would place much significance to the descending wedge pattern you identified. However I would be expecting a confirmed break of the violet down sloping resistance line before I would consider sentiment for 4DS to have changed to positive. EOFY tax loss selling is almost over now and hopefully some good news is on the horizon. Have to wait a little longer I think. Good to see the 4.3c support level I identified in my previous chart has be holding the SP recently.

Good luck, and remember DYOR!