Dow Jones (potential) trade opportunity: What is a busted technical pattern and why should you care
In the field of technical analysis, a chart pattern is said to have "busted" when it does not follow through in the manner in which it was anticipated it would. For traders who were expecting on the pattern to play out as planned, this may be a very unpleasant experience, as it might lead to losses or chances that were missed.
Watch the Video of the Dow Jones futures technical analysis and the potentially (upcoming busted bear flag)
In this particular instance, the Dow Jones futures (YM) on the four-hourly period have broken below the bear flag, so validating it for the first time. As of right now, we are retesting, but we need to keep an eye out for a fantastic bullish chance, in the event that it materializes, in which price enters and remains within the bear flag, as shown in the following video that provides a technical analysis of the Dow Jones. Early traders who want to bet on an early Long and still enjoy a BALANCE of a healthy probablity to win AND a high reward vs. risk (where the stop would be failry close to the entry and profit target much farther than the entry ) can seek a CLOSE of a 4 hour candle INSIDE the bear flag. Early traders who want to bet on an early Long and still enjoy a BALANCE of a healthy probablity to win AND a high reward v Those who are interested in a higher degree of confirmation might search for two successive candles of four hours' duration that close within the bear flag (the channel shown).
A bear flag is a pattern that is considered to be "busted" when the price breaks to the downside on a substantial enough timescale, such as the 4-hour chart. This is an excellent example of a pattern that has been "busted." Bear flags are chart patterns that have the capability of indicating a possible trend reversal. However, when the price instead reverses up and re-enters the bear flag, this is seen as a highly bullish development.
Note the difference between a "busted" technical pattern and a "retest" of a previously broken support or resistance
It is essential to differentiate between a "busted" pattern, which occurs when the price goes much further than just retesting, and a retest of a broken support or resistance level, or any other key price level, which happens quite frequently. A "busted" pattern occurs when the price goes much further than just retesting. A retest occurs when the price returns to a level of support or resistance that it has previously breached. Traders sometimes take advantage of this event as a chance to initiate or exit deals. A "busted" pattern, on the other hand, is far more important and might reflect a change in market sentiment. This movement in emotion indicates that the prior pattern is no longer relevant.
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