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Draft:TTG Triangle

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TTG Triangle Pattern

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The TTG Triangle is a stock chart pattern created by Michael Edward Perinotti, the Head Trader and Co-Founder of True Trading Group. This pattern is an enhanced variation of the traditional ABCD Pattern, designed to help traders identify high-probability breakout opportunities in the stock market.

The ABCD Pattern is a classic chart pattern used in technical analysis that helps traders identify potential reversal points in the market. It consists of four key points: A, B, C, and D. The pattern begins with a price movement from point A to point B, followed by a corrective retracement to point C, and finally a continuation to point D. The ABCD Pattern is renowned for its simplicity and effectiveness, providing traders with a clear framework for anticipating price movements and making informed trading decisions.

Key Components

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  1. Breakout Above Previous Highs: The TTG Triangle begins with a decisive breakout above previous highs, accompanied by a substantial increase in trading volume. This breakout is a clear indicator of strong buying interest and sets the stage for potential upward momentum.
  2. Pullback on Decreasing Volume: Following the breakout, the stock experiences a pullback towards the previous high. During this phase, the volume should decrease significantly, indicating a consolidation period that often precedes another upward move.
  3. Descending Triangle Formation: The pullback frequently results in the formation of a descending triangle pattern above the previous high. This pattern, characterized by lower highs and a horizontal support level, suggests diminishing selling pressure and a likely resurgence of bullish activity.
  4. Volume Analysis: Volume is a critical element in the TTG Triangle. The initial breakout's high volume, followed by a pullback with reduced volume, confirms the pattern's reliability and potential for a subsequent breakout.
  5. Support and Resistance Levels: Maintaining support above key levels during the pullback phase is essential. These support levels, often previous highs, reinforce the stock's strength and increase the probability of a continued upward trend.

Example

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Initial Breakout: A stock trading at $50 breaks above its previous high of $55 with a significant surge in volume, reaching $60. This breakout exemplifies robust buying interest and sets the TTG Triangle in motion.

Pullback Phase: After reaching $60, the stock pulls back towards the previous high of $55. During this pullback, the volume decreases, indicating that sellers are not as aggressive.

Descending Triangle Formation: The stock forms a descending triangle pattern above the $55 support level. The highs during the pullback are lower (e.g., $58, $57, $56), while the support at $55 holds firm.

Volume Analysis: The volume during the initial breakout was high, confirming strong buying interest. During the pullback, the volume decreased, indicating a lack of aggressive selling.

Support and Resistance Levels: The stock holds above the $55 support level during the pullback, suggesting strength and the potential for a subsequent breakout.

Visual Representation

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  Volume
    |
    |              /\ 
    |             /  \  
    |            /    \
    |           /      \
    |          /        \
    |_________/__________\________
    |         $55       $60
    |
    |
Price
  • Initial Breakout: Stock breaks above $55 with high volume, reaching $60.
  • Pullback Phase: Stock pulls back towards $55 with decreasing volume.
  • Descending Triangle: Lower highs ($58, $57, $56) form a descending triangle above the $55 support level.

Conclusion

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The TTG Triangle is a powerful pattern that combines price action and volume analysis to identify potential breakout opportunities. By focusing on breakouts above previous highs, pullbacks on decreasing volume, and the formation of descending triangles, traders can identify stocks with strong potential for upward movement. This pattern is particularly useful for swing traders and those looking to capitalize on short to medium-term price movements.

See Also

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References

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