Technical Analysis Plain and Simple: Charting the Markets in Your Language, Second Edition

Time Breaks

When a technical pattern, such as a triangle, breaks, prices begin to trend in the direction of the break. The typical conditions for a valid break are a significant price move and an increase in volume. A significant price move is one that is relative to the specific market and not just a few ticks. Triangles have another condition, and that is that the prices break out at approximately 2/3 of the triangle length (see Figure 22.3). It shows that the pattern was broken close to the apex where the upper and lower boundary lines meet. Breakouts must be due to price movement, not the passage of time, with the latter occurring simply because the triangle ran out of room.

Figure 22.3. Gold

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Now that the triangle ...