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The Dow's Amazing Symmetric Triangle

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The Dow did something strange and wonderful today on its intraday chart:

A perfect symmetric triangle pattern!  But one with really strange jumps up and down throughout.  Truly fascinating.  Usually Symmetric Triangles are "Continuation" patterns, which typically break in the direction of the trend prior to their formation.  But the Dow has been moving sideways for several days now so I'm not sure what this would be a continuation of.

More generally, Triangle patterns (also called "Coils") show that there is a big disagreement between the bulls (the lower uptrend) and the bears (the downtrend).  Symmetric Triangles indicate that both sides are evenly matched.  According to the old theory, as prices get closer to the projected apex of the triangle "energy coils up" (thus the name) which ultimately results in a "big release" of that energy upwards or downward.  The closer prices get to the apex, the bigger the jump.

Again, that's all "in theory."  And it's a pretty old theory at that - straight out of William Jiler's 1962 book!  But a  fascinating theory none-the-less.

Regardless, it's the big jumps that happened today at fairly regular intervals without corresponding volume spikes that caught my eye.  Similar patterns happened for other major US indexes as well.  Very strange indeed.

I can't wait to see what happens tomorrow.

- Chip

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Chip Anderson
About the author: is the founder and president of StockCharts.com. He founded the company after working as a Windows developer and corporate consultant at Microsoft from 1987 to 1997. Since 1999, Chip has guided the growth and development of StockCharts.com into a trusted financial enterprise and highly-valued resource in the industry. In this blog, Chip shares his tips and tricks on how to maximize the tools and resources available at StockCharts.com, and provides updates about new features or additions to the site. Learn More
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