After consolidating for several hours, the S&P CNX Nifty rebounded to the upside, regaining close to 50 percent of the break from 5385.93 to 5220.93. The final bottom helped form the support line of a falling wedge chart pattern on the 60-minute chart, creating an emerging pattern. Based on the strength of the retracement, Autochartist indicates that the rally is likely to continue into the downtrending resistance line currently near 5355.93.

The overall quality of the chart pattern is a slightly above average 6-bars. The initial trend which measures the strength of the trend prior to the chart pattern’s formation is rated 6-bars. Since both the initial trend and the expected direction of the next move are both up, Autochartist has determined that the trend change is a continuation. The uniformity quality indicator looks for the presence of equidistant tops and bottoms. Its low 3-bar rating suggests that this condition is not prevalent. The clarity quality indicator gauges the strength or weakness of the market noise. The high 9-bar rating indicates that the number of price gaps and price spikes is extremely low.

The falling wedge chart pattern is a trending pattern. It is created by combining the characteristics of the triangle and the channel down chart patterns. Since the support and resistance lines of this chart pattern have been gradually narrowing, traders should anticipate a possible breakout through the resistance line. Initially, this level is expected to provide resistance which may make it attractive to swing traders, but should upside momentum increase, then the market may power through the resistance and accelerate to the upside.

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UOL Group Limited (U14.SI) had two breakouts to the upside on Friday on the 240-minute charts. The first was a breakout through the resistance line of a triangle chart pattern. Autochartist forecasts that this pattern is likely to lead to a rally into the forecast price range at 4.81 to 4.87. The second chart shows a breakout that forecasts a move into 4.82 to 4.89.

Both patterns feature continuation trend changes. The first chart is based on a symmetrical triangle chart pattern created by 27 candlesticks. The second is an ascending triangle chart pattern consisting of 20 candlesticks. The shorter-term chart pattern features a much stronger overall quality rating. This is based primarily on its solid initial trend rating. The uniformity rating of both chart patterns is pretty consistent, indicating a low presence of equidistant tops and bottoms. The clarity ratings of both chart patterns are impressive. This likely means the presence of below average market noise.

The triangle and ascending triangle chart patterns are non-trending patterns. Both feature a gradual narrowing of their respective support and resistance lines. The triangle chart pattern is highlighted by an up sloping support line and a down sloping resistance line while the ascending triangle has a relatively flat top. Another shared characteristic of these two patterns is their ability to forecast impending volatility. The breakout through resistance by the UOL Group Limited was relatively weak; however, the move by the 27 candlestick pattern suggests a little more strength. Upside momentum will be necessary to drive this market into the Autochartist target zones. A trader will have to be able to judge the strength of this momentum to determine whether to get out at the first target level or to stay in the move for more upside movement.

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The formation of Point C helped China Aviation Oil Corporation Ltd. (S92.SI) create an emerging ABCD Fibonacci Pattern on the 1440-minute chart. Based on price and time symmetry, the equity CFD is expected to rally over the near-term until it reaches the upside objective at 1.47. If a top forms at this price, then traders should watch for a corrective move into the series of Fibonacci price levels ranging from 1.33 to .88.

The ABCD Fibonacci pattern is often called the backbone of all Fibonacci patterns. It is recognized by its “lightening bolt” chart pattern. Another key characteristic is its price and time symmetry. For example, the rally from Point C to the Target Price (Point D) is symmetrical with the rally from Point A to Point B. In addition, the break from Point B to Point C is often equal to a Fibonacci retracement of the rally from Point A to Point B.

The rally from Point A or .98 to Point B or 1.34 is equal to .36. Adding this figure to the bottom at Point C or 1.11 forecasts the move to the Target price Point D or 1.47. If the market tops at this price then traders should look for the start of a break back into the series of Fibonacci prices. Since the main trend is up, some counter-trend traders may want to short looking for the retracement. Trend traders may want to take profits on long positions then wait for the pullback into support.

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United Overseas Bank Limited (U11.SI) bucked the trend set by most global indices and broke out to the upside of a triangle chart pattern on the 60-minute chart. The move through resistance has set up the equity CFD from a potential move into the Autochartist forecast price zone at 18.28 to 18.42.

The overall quality rating of this chart pattern is a slightly above average 6-bars. The initial trend is rated a weak 3-bars. This quality indicator measures the strength of the trend prior to the chart pattern’s formation. In addition, the initial trend is up as well as the breakout; therefore, Autochartist has identified this trend change as a continuation. The uniformity rating is a solid 9-bars. This suggests the strong presence of equidistant tops and bottoms. The clarity rating measures the amount of market noise. The 6-bar rating indicates a slightly below average amount of “gaps” and “spikes”.

The triangle chart pattern is a non-trending pattern.  Its most noticeable characteristic is the gradual narrowing of the support and resistance lines. This action compresses the 60-minute ranges indicating an impending breakout. Increased volume and volatility often accompany this move. This is a necessary step in the trading process since upside momentum will be needed to help the market reach the Autochartist price forecast target. The maximum 10-bar breakout rating suggests that the move through resistance is strong enough to take United Overseas Bank Limited to the forecast zone within the indicated 44-candlestick time period.

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Investors refused to chase the Straits Times Index (STI ETF) higher several times last week, leading to an end-of-the-week sell-off and helping to form the resistance line of a channel up chart pattern on the 1440-minute chart. The gap lower shortly after the final top near 3.05 is a strong sign that sentiment may be shifting to the downside after a prolonged rally from the bottom near 2.67 in December.

The overall quality of the chart pattern is a solid 7-bars. The initial trend is an impressive 10-bars or the maximum rating. This quality indicator measures the strength of the trend prior to the chart pattern’s formation. Since the initial trend is down and the emerging move is expected to be down, Autochartist is calling this a continuation trend change. The uniformity indicator which looks for equidistant tops and bottoms is rated a slightly below average 4-bars. The 7-bar clarity rating indicates that market noise is below average.

The channel up chart pattern is a trending pattern. Inside of the support and resistance levels, the trend is up, but now that solid resistance has been established, the market may be poised to pick up the direction of the initial trend. Based on the rally from 2.67 to 3.05, the first downside target is the 50 percent level at 2.86. This is followed by the Fibonacci level at 2.82. Once this potential support zone is cleared, the market may accelerate to the downside into the uptrending support line near 2.77.

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The failure to ignite a sizable break after testing the swing bottom near 49.75 helped Jardine Matheson Holdings (J36.SI) form the uptrending support line of an ascending triangle chart pattern on the 240-minute chart. The size of the candlestick which confirmed the bottom suggests that a strong upside bias may be developing.

The overall quality of this emerging chart pattern is rated 5-bars. The initial trend is rated a weak 3-bars. This quality indicator measures the strength of the trend prior to the chart pattern’s formation. The uniformity rating of 4-bars indicates that the number of equidistant tops and bottoms is below average. The clarity indicator looks for the presence of market noise. The solid 8-bar rating suggests that the occurrence of “market gaps” and “market spikes” is below average.

The ascending triangle chart pattern is a non-trending pattern. The key characteristic of this chart pattern is the gradual narrowing of the support and resistance lines. This action compresses prices, setting up an impending breakout. Autochartist has determined that this emerging pattern has developed a bias to the upside. Since the initial trend is also up, the trend change is being deemed as a continuation. The size of the last candlestick suggests the presence of upside momentum. This, along with rising volume will be needed to drive this market through the resistance level.

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After reaching 54.00 on February 7, Jardine Matheson Holdings Limited (J36.SI) broke sharply, helping to form the resistance line of an emerging triangle chart pattern on the 1440-minute chart. Not only has the price action created a possible triple top using a long-term view, but the break through the last swing bottom at 51.50 changed the main trend to down, indicating further price erosion is likely.

The quality of the chart pattern is an average 5-bars. The initial trend which measures the strength of the trend prior to the chart pattern’s formation is rated a weak 2-bars. The initial trend is up and the emerging pattern’s direction is forecast down. Based on this information, Autochartist has determined that the trend change is likely to be a reversal. The uniformity rating is a solid 7-bars. This means the presence of equidistant tops and bottoms has been detected. The clarity indicator looks for “market spikes” and “market gaps”.  The 7-bar rating suggests that “market noise” is below average, indicating the formation of a “clean” chart pattern.

The triangle chart pattern is a non-trending pattern. Typically a market will trade inside of the support and resistance lines, gradually narrowing and compressing the daily ranges. As it nears the apex, pent-up volatility usually leads to a strong breakout. When the distance between support and resistance is still wide like it is now, the chart pattern is more conducive to swing trading rather than breakout trading.

With Autochartist indicating a potential break into the support line near 47.00 and the main trend down, traders may like the opportunity being offered on the short-side of the equation. Although the distance between support and resistance appears to indicate a sharp break is building, traders have to respect the mid-point at 49.50. A test of this level may produce a technical bounce to the upside due to profit-taking, but once this level is cleared, the market is likely to continue its quest toward the next downside target or support angle.

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Late last week, GuocoLand Limited (F17) broke out to the upside of a triangle chart pattern on the 1440-minute chart, putting the market in a strong position to reach the Autochartist forecast price zone within the predicted time period. Based on price and time analysis related to the chart pattern, the forecast is for a rally to 1.92 to 1.99 over the near-term.

The overall quality of the chart pattern is an average 5-bars. The initial trend is rated a weak 1-bar. Since the initial trend is down and the breakout is to the upside, Autochartist is calling for a reversal trend change. The uniformity rating is a solid 7-bars. This high rating suggests the presence of equidistant tops and bottoms as well as successful tests of support and resistance. The clarity quality indicator measures the amount of “market noise” present during the chart pattern’s formation. Its 6-bar rating suggests a below average amount of “gaps” and “spikes”.

The triangle chart pattern is a non-trending pattern. Those traders willing to trade this pattern typically look for a volatile move due to the compression of the trading ranges prior to the breakout. The solid 9-bar breakout rating indicates the presence of strong upside momentum. Above average volume often accompanies this pattern. The combination of strong volume and high momentum often indicates that strong buyers are controlling the market. If this scenario holds true, then the market is likely to reach the overhead target over the short-run.

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The Singapore Exchange Limited (S68.SI) equity CFD took out the long-term downtrending resistance line of a channel down chart pattern on the 1440-minute chart, completing the chart pattern and signaling a possible breakout to the Autochartist forecast price zone at 6.78 to 7.09. The channel took 100 candlesticks to form. This could draw the interest of long-term traders who will be needed to increase the momentum necessary to drive the market into the forecast zone.

The overall quality of the chart pattern is a slightly below average 4-bars. The initial trend is up but the move generated only a weak 3-bar rating. The breakout was also to the upside so the move is deemed a continuation trend change. The uniformity rating measures the presence of equidistant tops and bottoms as well as the number of successful tests of the support and resistance levels. The 7-bar rating suggests a slightly above average number of these two factors. Finally, the 2-bar clarity rating indicates the presence of “market noise” which generally means the existence of unnecessary “market spikes” and “gaps”.

The channel down chart pattern is a trending pattern. Its main characteristic is the parallel and wide support and resistance lines. These contain the tops and bottoms as well as creating the trend, making it an attractive chart pattern for swing traders. A breakout of a channel down chart pattern does not typically generate the same volatility as a triangle breakout. This is because there is no price compression during its formation like the non-trending patterns. This doesn’t mean the breakout will fail, but it does suggest the absence of volatility. This is probably why the breakout rating is only a weak 4-bars. Aggressive traders can trade the long side with tight stops. More conservative traders may want to wait for a pull-back or retracement.

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CapitaLand Limited (C31.SI) broke out over the resistance line of a falling wedge chart pattern on the 1440-minute chart, triggering the start of a possible rally into the Autochartist forecast price zone at 2.94 to 3.54. The 195-candlestick length of this chart pattern is significant because it suggests that traders have had a significant amount of time to assess the validity of this breakout. Like all breakout patterns, rising volume and volatility will be needed to drive prices higher.

The overall quality of this chart pattern is 7-bars. The initial trend indicator measures the strength of the trend prior to the formation of the chart pattern. In this case, the initial trend was up while posting a weak rating of 3-bars. Since the breakout is also to the upside, Autochartist is calling the trend change a continuation pattern. The 7-bar uniformity rating means that there is a significant number of equidistant tops and bottoms as well as successful tests of the support and resistance levels. The 195-candlestick length is having a major influence on this chart pattern’s quality which is rated the maximum 10-bars. This high rating means there is virtually no “market noise” to skew the chart pattern.

The falling wedge chart pattern is a trending pattern. It is a combination of the channel down and triangle chart patterns. Like the channel down, it gives the trader a great look at the trend inside of the support and resistance levels. The triangle’s influence on the falling wedge is the gradual narrowing of the support and resistance lines. This typically indicates impending volatility and often gives clues as to when the market will begin its breakout.

Despite the length of the chart pattern, the breakout through resistance was rated a weak 1-bar. This means that strong buyers are going to have to show up with increasing volume and volatility or the market will fail to reach its objective. There is limited risk in trading on the long side of the market and the reward/risk ratio is reasonable, bullish traders just have to remember to watch for the presence of upside momentum before entering on the long-side of the market.

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