Weekly ASX Update: AGL Energy Limited FPO (AGK.AX) |
By, James A. Hyerczyk
AGL Energy Limited FPO (AGK.AX) broke out to the upside of a triangle chart pattern on the 240-minute chart. Not only did the equity CFD surge through a downtrending resistance level, but it also took out the December 5 swing top at 14.70 to change the main trend to up. The size of the candlestick on the breakout indicates the presence of high volatility, putting the market in a position to test the Autochartist forecast price zone at 14.91 to 15.29 over the near-term.
The overall quality of the chart pattern is an average 5-bars. The initial trend indicator which looks at the strength of the trend prior to a pattern’s formation was up. Since the breakout was to the upside, this pattern is a continuation move. Its 6-bar rating suggests slightly above average strength. The uniformity rating is also 6-bars. This suggests a slightly above average amount of successful tests of support and resistance. In addition, it may be indicating a better than average amount of equidistant tops and bottoms. Finally, the clarity rating is a well-below average 3-bars. Trading was thin at times, leading to gaps and unusual candlestick patterns, suggesting the presence of “market noise”.
Based on its breakout through the resistance level, it looks as if traders were able to overcome the average-to-below average ratings of its quality indicators. This is because of a key characteristic of the triangle chart pattern. The triangle is a non-trending pattern. The gradual narrowing of its support and resistance lines compresses the market’s range. This action creates an almost precise entry point, or in other words, it pinpoints when and where a market is likely to breakout. Since the Autochartist breakout rating is the maximum 10-bars, there is strong momentum behind this pattern. If bullish traders can jump on board this move, the market should reach the Autochartist forecast price zone over the near-term.
About the author: Autochartist
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