Flags and Pennants

My last post brought to mind the idea of chart patterns which are a well know way of looking at price action by the patterns price makes on the chart. Of all the patterns the parabolic price pattern is the one that has the potential for the most gain because price goes straight up. It also has the potential to reverse quickly and thus wipe out the gains, or even result in a loss for those that bought at the top. The $CRB monthly chart was parabolic up to the beginning of March when it quickly reversed. This reversal led to the development of a pennant formation which has broke out to the upside. I will discuss bull and bear flags at a latter time but here wish to illustrate how the $CRB daily chart has broke out of a pennant formation and this is a sign inflation could rise. I have embedded an illustration of a bullish pennant in an uptrend on the chart. Click to enlarge.