Technical traders looking at the patterns of the ASX200 are seeing signs of an impending breakout, after months of the market trading listlessly sideways, lacking any real conviction.
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A tentative triangle pattern has emerged on trading screens and the point at which traders react to either an ascending or descending triangle is about two-thirds of the way along, right where the ASX closed on Friday.
But whether the market breaks to the upside or the downside is still up in the air, though experts say chances are the market will break to the downside.
"This triangle is unusual in that it's been going on for quite some time," says Michael Gable, managing director of Fairmont Equities.
"But we are getting to around two-thirds of the way towards the point and we're likely to break out in the direction of the preceding trend."
In the case of the ASX200, it peaked at the beginning of May at 5956 points and then slumped to 5667 points, before forming the current triangle. As such any breakout will likely continue that slide.
Triangles are horizontal trading patterns that generally show when whether the buy side or the sell side is gaining momentum, as shown in in an ascending triangle or a descending triangle.
But in the current case of the ASX200, traders are witnessing a symmetrical triangle, with neither the buy side or the sell side gaining the upper hand. But Mr Gable points to a tightening range.
'This is the whole market'
"Generally, the longer the triangle, the more powerful the move, so the fact our market has been doing this for the last few months means when we do figure out which direction it's going to go in, then it's going to be quite powerful," says Mr Gable.
"We're not just in the realm of a few traders looking at the direction of one stock, this is the whole market. So when we do break, it means everybody is going to jump on board and trade that direction."
But other technical traders are sceptical the triangle will materialise completely.
"The market could be seen to be accumulating towards a triangle point and perhaps bust out of the shape," concedes Alex Chen, senior investment consultant at Rivkin Securities.
"But the price range is still fairly wide, in fact, I think the ASX200 is likely to keep trading within a 100-point range until the end of the year."
This is known as a ranging trade, where the market takes the shape of two parallel lines. Technical traders often take advantage of these steady ranges to buy when the market reaches its consistent low point and sell at the recurring highs.
"These boundaries look pretty steady, but of course I think traders are looking for an excuse to break up or down," says Mr Chen.
"It might come in the form of a confidence shake in China or maybe the RBA will raise interest rates."