ES Topping Triangle Comparison With An Oil Topping Triangle
Trader Moe | Sep 10, 2015 12:56AM ET
ES Completed the Red Topping Triangle with a Fake Breakout Through and Topping Formation at the Top and Should Break Out Downwards to Take Out the August 24 Low
Today, ES completed a fake breakout and topping formation at the top of the red triangle to top the move out of the August 24 low.
The way these tops typically play out is with a retrace to the triangle top and then a breakout through the formation bottom.
h3 Oil Topping Triangle/h3Here is a long-term topping triangle example on oil. The fake breakout and topping pattern at the top are difficult to see, so I include a closer look below.
Example of Topping Triangle on Oil
Note the Similarities Between the ES Topping Triangle and this Oil Topping Triangle
h3 Details of Topping Triangle Structure/h3Note the similarities between the ES triangle and the close-up view of the oil topping triangle. The final wave up of both bogged down around the triangle middle before melting up in a rising wedge to a fake breakout through the triangle top. Then a head and shoulders completed with a neckline at the triangle top before the price broke back into the triangle.
All of this is pretty much standard for this type of topping triangle.
Most of these triangles put in a hard wave down upon reentry into the topping triangle. We got that move down in ES today, and you can see oil’s reentry into its topping triangle below.
Oil Reentered Its Topping Triangle with a Hard Wave Down
Oil put in a megaphone at this point to swing the price up for a retest of its triangle top before breaking out the bottom. ES is likely to do the same thing before breaking out the bottom of its topping triangle.
h3 Topping Triangles Tend to Break Out into Strong Moves Down/h3Topping triangles tend to result in strong moves down because many traders don’t accept the idea of a topping triangle and see the internal structure of the formation as bullish. So they tend to be positioned incorrectly for the breakout.
Whether you think this formation should be called a topping triangle or something else, it’s worth paying attention to the details of the formation structure because you will see a lot of them on all time frames and they are strong trading set-ups.
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.