Interesting Idea: hidden bearish wedge (with breakout)

27 Okt 2014

I think certain technical formations may exist even when price action "hides" them. Here I drew out what I thought a bearish wedge, hidden by a rally that was rejected in nearly equal selloff. My thought is that you can somewhat disregard the rally since it was met with an equal sized selloff, creating a neutral zone of high volatility. Then draw what appears to be an upward slanted wedge (as if the rally never happened), which is bearish and usually followed by a breakout down. As it turns out, the hidden wedge predicted price action quite well. I am still bearish and expect to test the 2000 level within a day or two.