I would prefer not to talk about this particular stock were it not that it appears to provide a great entry point soon. The chart on the left is just to make clear where we are today and the scale of what might still be possible. This particular instrument is, of course, the inverse 2x leveraged Horizons Betapro TSX index ETF. It is presently tracing out a very clear and articulate “contracting diagonal triangle” a.k.a. a wedge. All five legs in this structure are sub dividable in threes. There is overlap between 2 and 4. There is alternation between 2 and 4. By the time it is complete it will be less than a single dollar lower than it was about three years ago, typical of the coming end of the drop from >$40. Using a more detailed chart (see below), I make the low $6.95, but remember that the price does not have to go right to the line and may well stop before ever getting there.
The RSI typically drops below the oversold 30 level at , or just before, reaching such extremes. The minimum target for this trade is at $12.50 but the ultimate potential is for it to go much higher. On a scale of 1 to 10 in terms of confidence in this trade, I would put it at 9.5. You can enlarge the chart by clicking on it and increasing your own confidence level. Also I have added an example of a similar structure that occurred with BBVA, Banco Bilbao Viscaya, the one in purple . In that case the low was actually made slightly below the lower trendline and there was no alternation (welcome but not required). The stock did double almost immediately, see that blog. There are dozens of other examples, YUM being the most recent one.
