As of 08/11/2020
Indus: 27,687 104.53 0.4%
Trans: 10,890 +24.59 +0.2%
Utils: 822 19.04 2.3%
Nasdaq: 10,783 185.54 1.7%
S&P 500: 3,334 26.78 0.8%

YTD
3.0%
0.1%
6.5%
+20.2%
+3.2%

28,150 or 25,000 by 08/15/2020
11,100 or 10,050 by 09/01/2020
870 or 800 by 08/15/2020
11,300 or 10,200 by 08/15/2020
3,500 or 3,250 by 09/01/2020

As of 08/11/2020
Indus: 27,687 104.53 0.4%
Trans: 10,890 +24.59 +0.2%
Utils: 822 19.04 2.3%
Nasdaq: 10,783 185.54 1.7%
S&P 500: 3,334 26.78 0.8%

YTD
3.0%
0.1%
6.5%
+20.2%
+3.2%
 
28,150 or 25,000 by 08/15/2020
11,100 or 10,050 by 09/01/2020
870 or 800 by 08/15/2020
11,300 or 10,200 by 08/15/2020
3,500 or 3,250 by 09/01/2020
 
Price follows trends. When you draw a downsloping line along the price peaks, price often touches the line and falls away without piercing it. The line is called a trendline because it shows the price trend.
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For more information on this pattern, read Trading Classic Chart Patterns, pictured on the right, pages 9 to 28.
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$ $ $
Down Sloping Trendline Chart Pattern

Characteristic  Discussion 
Log scale  Use the logarithmic scale. Price will signal a trend change sooner on the log scale than on the arithmetic scale. 
Minor highs  Draw a downsloping trendline along the price peaks. That way, when the trend changes from down to up, you'll know with a trendline pierce. The numbers in the above chart show price touching the trendline five times. 
Touches  The more touches a trendline has the more powerful the move after a trendline pierce. 
Spacing  Widely space touches (over the median 29 days each) suggest a more powerful move post breakout. 
Length  Long trendlines (more than the median 139 days) are more important than short ones. They lead to more powerful rallies after the trendline pierce. 
Slope  Shallow trendlines (up to 45 degrees) are more reliable than steep ones (over 60 degrees). Again, they lead to more powerful moves after the trendline pierce. 
Volume  A downward volume trend results in a more powerful rally after the trendline pierce. 
In each of the above categories, I examined over 200 trendlines and evaluated the price performance after price closed above the downsloping trendline. I tracked price until it peaked and dropped by at least 20% (a trend change). The move from the trendline breakout price to the high price was the measure.
For example, I found 85 trendlines with 3 price peaks touching the trendline. Price after the breakout climbed 33%. This compares to a rise of 38% from 63 trendlines with 4 touches, 57% rise from 40 trendlines with 5 touches, and so on. I concluded that the more touches, the more powerful the rally after the trendline breakout. Consult my Trading Classic Chart Patterns book for more information on the results.
Use the measure rule to predict how far price will rise after an upward breakout (a price pierce) from the trendline. The figure to the left shows a downsloping trendline with price breaking out upward at point B. From the breakout, find the prior minor high trendline touch. I show it as point A. Measure the widest distance between those two points, measured vertically. In this case, that's the distance from C to D. Multiply that distance by 80% because that's how often this method works when a full height is used, and project the result upward from the breakout price – the point where price pierces the trendline.
For example, if the low at C is 10 and directly above that at point D, the trendline is at 12, the difference is 2. Multiply this by 80% to get 1.60. Suppose the breakout at point B is at 11. That would give a price target of 12.60 (11 + 1.60).
 Thomas Bulkowski
See Also

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