Some of you might have noticed it is the third time I have changed the way I drew in the consolidation pattern with PKL.TO – PC Gold. I originally labeled it a ‘Bullish Flag Pattern’, then I changed it to ‘Ascending Triangle Pattern’. Right now I am inclined to see a flag type pattern. In my chart annotation though I decided to now simply label it some kind of ‘Consolidation Pattern’.
The point I want to drive home here is simple. Do not try to be perfect. Trading is not about being perfect. That implies there is no such thing as ‘wrong’ or ‘right’ when it comes to drawing lines forming a specific pattern. Some technical traders exclusively connect daily highs with daily highs. Others only draw trendlines connecting closing prices with closing prices. Personally, I don’t care. I believe this is more of an art as opposed to being an exact science. The most important thing to keep in mind is to be honest when it comes to interpreting the chart’s message. As long as you are not in denial of reality when drawing trendlines it is ok to come up with slightly differing trendlines. The point is that if drawn ‘correctly’ they will convey the same message. In PKL.TO – PC Gold’s case the message the chart comes up with is that price is consolidating within a tight price range and that volume is drying up. The message is bullish. What kind of price points you use in order to connect them to build trend lines, or if you see more of a triangle type of pattern or a flag misses the point.
Nonetheless some of you are keen on knowing more details. So here you are: The reason why I decided to ‘cut off’ some of the candles and not connect the price highs serves a purpose. It better conveys what I am seeing to the untrained eye. Put another way, it significantly reduces noise and focuses on the essentials of the pattern. I consider the two candles I intentionally left out to somewhat be outliers. Leaving them out of the pattern is a great way to reduce noise.
Up-to-date PKL.TO – PC Gold chart on my public list.
Some quotes on perfection…
A man would do nothing if he waited until he could do it so well that no one could find fault. – John Henry Newman
Striving for excellence motivates you; striving for perfection is demoralizing. – Harriet Braiker
When you aim for perfection, you discover it’s a moving target. – George Fisher
Even the best needles are not sharp at both ends. – Chinese Proverb
My public list with all my charts can be viewed here:
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID2791469
Have great evening!
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