IWM Ascending Triangle

The IWM has a bullish ascending triangle on its daily chart (click to enlarge):

iwm-triangle

The red lines outline the triangle. The lower red line extends farther back, so it has a good deal of importance beyond the triangle. The blue line marked “L1” gives the height of the triangle, and a breakout would project the same length shown by line “L2”.

From L2, follow the purple line to the left and you will see that a breakout would measure to the January peak marked by the purple arrow. So, if the IWM can break above the 48.25 area, it may have another 8%, or so, to run.

The IWM has outperformed SPY and QQQQ during this rally, and it represents 2,000 small-cap stocks, so it is important to watch. Also, even though many bears are calling this “The Crap Rally”, the fact that small-caps are leading doesn’t really tell us anything.

QQQQ has a similar pattern to the IWM, though it may be degrading. And since the XLF topped back on the 17th, and SPY is still conforming to its bearish rounding-top pattern, I wouldn’t be surprised to see the IWM “round over” also. Nevertheless, if it breaks out, you definitely don’t want to be in the way.

9 thoughts on “IWM Ascending Triangle

  1. Yerk,

    OK, I see what you mean. Well, if the past several trading days has created a right shoulder, and the top red line on the chart becomes a neckline, the IWM could be forming a giant H&S that would measure all the way up to fill the gap left on October 3rd.

    Matt

  2. dax broke above 4650 – that’s bullish. Potentially we’re going to see new highs now. Bears sick with bear flu.

  3. FTSE still bullish on the 60min and on the daily it’s broken above it’s early April high this week. British bears gone into hiding !

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