This is definitely a wedge example.
It has achieved the first level of completeness plus.
Wedge initiation is a sharp upward motion, which occurred here on the first day of 2018. (A sharp downward motion could also initiate wedge development but in this example it was sharp upward motion.)
Following upward wedge initiation, gradual downward motion is wedge development.
First level completeness is achieved with the formation of a point. A point can be defined as a short real body, positioned at the apex of a wedge.
The short real body of today's inverse hammer is certainly short and in position. It is complimented by yesterday's short real body, so it's doubly a point.
(The term "real body" refers to "candles" in the "candlestick" type chart.)
Do note that there was a point on this wedge four days ago, and that the price has since declined a bit. Note that the point four days ago was also doubly a point because, in that case, it was a point on a small wedge in position to be a point on the larger wedge.
The decline in price since the point four days ago illustrates two considerations. The first is that wedges may predict, but they don't guarantee anything. The second is that a point on a wedge is only the first level of wedge completeness. (This is the first level plus because there are now two points on the wedge that initiated on the first day of the year and it's plus plus because this second point is doubled. Plus plus is simply a point count, though. We can't say, without testing, whether it has predictive value.)
I believe examples can be found of beneficial and immediate price change originating in first completeness level wedge patterns, but I also suspect that second completeness level development will be seen before post-wedge price change more often than not. Second level completeness here would be the beginning of an increase in price, ending in another point. Note that second level completeness action can describe a wedge pattern but also can describe other pattern types. Careful reading of this should suggest to you that, while it is logical that points will complete wedges, they can also appear in (and be predictive in) other contexts.
This month's wedge is attractively positioned above a diamond shaped head and shoulders pattern - December's action - and it is positioned to be the right shoulder of a larger head and shoulders pattern, with the action of the latter part of November being the left shoulder. There are very prominent tops in the $6.50 area, which I interpret as predicting a move to that level followed by a break in the action.
Disclaimer: this is not to be construed as mony-making advice, or investment advice, or as a recommendation or suggestion to buy. Any purchase of shares involves risk, up to and including the possible loss of all invested funds. The reader is responsible for informing her or himself of the risks of trading and investing and assessing those risks and I disclaim any responsibility for thus informing the reader. It is widely reported that most traders loose money. All statements made here are strictly for entertainment purposes and not for any other purpose.
Entertainment means my entertainment. I enjoy studying chart patterns, and I enjoy writing about them. I do hope readers will also be entertained and even find this, if not useful, then thought provoking, and I hope to earn some steam power by posting it, which would also be entertaining.
In trading, risk can in some measure be controlled using stops - at least in theory. Effective use of stops to cut losses short is said to be a key to success in trading. It should be noted that stops cannot guarantee any upper limit to the risk of loss in a trade. I will not be discussing stops here, beyond what I just said. Due to considerations having to do with my own situation, I do not plan to buy this stock at this time. I do own a few shares, but that's another story and it implies nothing. Also, I should add, I don't feel that I've satisfactorily assessed the risk. If I were buying it, I would be buying only a small number of shares, perhaps 30, in which case my risk would only be about $100, in the case of a complete loss, without considering stops at all. Such a purchase could be justified given that I would be hoping for nearly a 100% return. Final point: the stock could stop trading at any time - especially given its speculative nature - in which case a 100% loss of invested funds would indeed be the likely result.
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