This morning on the 45 minute chart, there are potential descending triangles on the emini Futures (Nasdaq, S&P 500, and Russell 2000). If price manages to break through the lows and then retests the same area and resistance hold, there could be a major move to the downside. This is a potential formation that may or may not hold, depending on today’s price action.
What are descending triangles?
These patterns typically appear as double lows with lower highs. They are typically referred to as a continuation pattern that forms in a downtrend. However, they can occasionally signal a change in trend. In this case, the emini Nasdaq, emini S&P 500, and emini Russell 2000 all are making equal lows with lower highs.
At the open, price may go back and test the high trendline (red line) and if it holds (meaning price does not close above it), then it may break through the blue line, which identifies the lows. After a break of the lows, price will typically go back and test the lows to ensure that resistance has formed.
E-mini S&P 500
With the Stochastics near 20, a test of the upper trendline is likely. Ideally, if hidden divergence appears on the highs (lower highs in price and higher highs in the Stochastic), it may kick off the break of the lows.