Wedges and Pennants

By Colin Twiggs
September 2, 2008 4:00 a.m. ET (6:00 p.m. AET)

These extracts from my trading diary are for educational purposes and should not be interpreted as investment or trading advice. Full terms and conditions can be found at Terms of Use.

Gold

Spot gold respected the new resistance level at $850 before breaking downwards from its recent pennant. Although the pattern resembles a rising wedge, anything less than 3 weeks duration should be considered a pennant (continuation pattern). Expect another test of primary support at $770.

The long-term target for the primary down-trend is calculated as $700, that is $850 - ($1000 - $850).

Source: Netdania

Crude Oil

West Texas Intermediate Crude completed a pennant (again the duration is too short to be a triangle) with a downward breakout, signaling further weakness. Penetration of support at $110 would warn of a primary down-trend — confirmed if the key psychological level of $100 is broken.

The Chinese Purchasing Managers Index (PMI) fell below 50 in August, indicating that activity is contracting. But whether this will translate into a drop in crude oil consumption (and a strong primary down-trend) is too soon to tell.

Source: Netdania

Currencies

The euro displays a falling wedge pattern, signaling retracement to test the new resistance level at $1.50.

Penetration of the long-term rising trendline would warn of a primary trend reversal — confirmed if support at $1.43 is broken.

Source: Netdania

The dollar is again testing support at 108.50 against the yen. Downward breakout would warn of a bull trap — and a test of primary support at 103.50. Recovery above 111.00, on the other hand, would confirm the primary up-trend.

Source: Netdania

The Australian dollar fell sharply after the RBA announced a 0.25% reduction in the official cash rate, breaking support at $0.85 to signal a test of $0.77. Expect a retracement to test the new resistance level, but recovery above $0.85 is unlikely — and would warn of a bear trap.

Source: Netdania

The Aussie broke through short-term support at 93 and is headed for the band of primary support between 88 and 90.

Source: Netdania

The whole history of civilization is strewn with creeds and institutions which were invaluable at first, and deadly afterwards.

~ Walter Bagehot

To understand my approach, please read About The Trading Diary.

	Wedges and Pennants By Colin Twiggs September 2, 2008 4:00 a.m. ET (6:00 p.m. AET) These extracts from my trading diary are for educational purposes and should not be interpreted as investment or trading advice. Full terms and conditions can be found at Terms of Use. Gold Spot gold respected the new resistance level at $850 before breaking downwards from its recent pennant. Although the pattern resembles a rising wedge, anything less than 3 weeks duration should be considered a pennant (continuation pattern). Expect another test of primary support at $770. The long-term target for the primary down-trend is calculated as $700, that is $850 - ($1000 - $850). Source: Netdania Crude Oil West Texas Intermediate Crude completed a pennant (again the duration is too short to be a triangle) with a downward breakout, signaling further weakness. Penetration of support at $110 would warn of a primary down-trend — confirmed if the key psychological level of $100 is broken. The Chinese Purchasing Managers Index (PMI) fell below 50 in August, indicating that activity is contracting. But whether this will translate into a drop in crude oil consumption (and a strong primary down-trend) is too soon to tell. Source: Netdania Currencies The euro displays a falling wedge pattern, signaling retracement to test the new resistance level at $1.50. Penetration of the long-term rising trendline would warn of a primary trend reversal — confirmed if support at $1.43 is broken. Source: Netdania The dollar is again testing support at 108.50 against the yen. Downward breakout would warn of a bull trap — and a test of primary support at 103.50. Recovery above 111.00, on the other hand, would confirm the primary up-trend. Source: Netdania The Australian dollar fell sharply after the RBA announced a 0.25% reduction in the official cash rate, breaking support at $0.85 to signal a test of $0.77. Expect a retracement to test the new resistance level, but recovery above $0.85 is unlikely — and would warn of a bear trap. Source: Netdania The Aussie broke through short-term support at 93 and is headed for the band of primary support between 88 and 90. Source: Netdania The whole history of civilization is strewn with creeds and institutions which were invaluable at first, and deadly afterwards. ~ Walter Bagehot To understand my approach, please read About The Trading Diary.	Share: A+ A− FREE 12-month subscription to The Patient Investor Get the insights you need to stay ahead in financial markets when you sign up to Incredible Charts premium service by 31 December. Start Now Incredible Charts Try our popular premium stock charting software, with proprietary trading tools and powerful stock screens. More than 420K downloads Suitable for Windows 10 & 11 Start with a 5-day Free Trial Download Premium Web Charts Premium cross-platform web charts with proprietary trading tools and powerful stock screens. No downloads or installation required. Suitable for Windows, macOS, and Linux operating systems. 5-day Free Trial Trading Diary Free education, with technical updates and macro outlook. Join Now
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