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Tuesday, January 8, 2008

GEO: Falling Wedge, Descending Triangle (bearish)

I'm seeing two bearish pattern in this issue. One, a falling wedge and Two, a descending triangle.
Although falling wedge is known to be a bullish pattern. But, wedge should point opposite its previous trend. Since, GEO has been trending down we need a rising wedge to make this issue bullish. Unfortunately, we are seeing a falling wedge and this might signal a continuation of a downtrend. Looking at the possible target price, it might even go below P1.

Falling Wedge in Downtrend
GEO Chart as of January 7, 2008

Another chart, is a descending triangle formed by connecting the previous recent low with today low.
Descending Triangle
GEO Chart as of January 7, 2008

My mistake was when I saw a falling wedge. I immediately thought that this is bullish. I even made a position @ 1.60 I though it will be the support of the wedge. I'm trying to counter-trend. I forgot that when falling wedge are found in uptrend it will continue to trend up but when falling wedge are found in down trend then it will continue to trend down.

Still, something to watch if indeed the rules are true.