My views on this discussion -
Still won't call it a failed pattern. It almost made it and if the budget started an hour or two later it would have definitely made it. At the end of the day it was still rising and rose on the budget day as well. It is a 3 day pattern so you would need to give it 3 days to complete.
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On hrly chart the pattern took 15+ bars to make it..and if it couldn't last even 1/2 of those many bars.
While price factors everything in, I'm not sure that price can factor in the budget.
IMO, events act as catalyst to price move. On charts, 4500 was anyway a resistence level. It took many bars to fall from there too 4250 level..but budget frenzy took just 5 bars to go back to same resistence
level and finally Resistence zone did what they are supposed to do... i.e. act as resistence and push the prices down..
Impatience traders / or traders who go by the rule book, find it difficult to handle..whereas if we give time to the price action to develop, the picture becomes quite clear..
On budget day it is important to go with the budget than charts. Budget affects both short and long term. I feel it is not wise to combined budget with chart patterns because one is fundamental and another technical with don't usually go together so budget takes precedence.
If you go by the budget day and price action post budget day.. (Sunil has posted outstanding analysis on that in seperate thread of budget weekend).. two messages were pretty clear
1) Budget days have wide range..
2) Market falls after budget in more then 80% of the time.
This time again, price action just repeated the history (no brainer for person who trusts the chart ).
I will consider budget as earthquack event.. but they are predictable as we know when they are coming.. (known devil is easier to handle then unknowns)
If we were to assume there was no budget on monday and markets tanked without any reason then it would be right to go long on break out and then reverse. I think it is better to go short at the horizontal red line because after breakout it is support slipping back into the triangle is a break of support. It may depend on the trader though.
We all may have different way to trade same pattern due to our own approach. Even if someone has gone long on ascending triangle breakout.. the initial stop would have been in the triangle zone (base or upward sloping line or projected apex of triangle).. It the stops were not moved to breakeven then still the trade would have been closed on Monday when market dropped below the stoplevel.
Starting short trade is just another trade. Some may consider triangle breakout as false breakout (price could not hold above breakout level for sufficient #of bars), or can call it double top at 4500 level, or reversal from right shoulder of H&S pattern there or divergence on the oscillators. All depends on what we want to see on the chart.. None of the approach or logic is wrong.
Hope we are enjoying the breakdown..
Happy Trading.