[isatrader]

This P&F chart for POT seems to be giving me conflicting info so I'm hoping I can get some help interpreting it. I am currently short in POT. The P&F pattern is "High Pole Warning". Stockcharts explains the High Pole Warning (HPW) saying:

The high pole warning is given when a chart rises above a previous high by at least 3 boxes but then reverses to give back at least 50 percent of the rise. The reversal implies that the demand that was making the prices rise has given way to supply pressure. The pattern is a warning that lower prices could be seen in the future.

(http://stockcharts.com/school/doku.php?i...#high_pole)

My confusion is that the chart is also showing a a Bullish Price Objective of $41.51 so I'm struggling with why I am getting a Bearish chart pattern (HPW) with a Bullish price objective. I would think that the HPW would more likely confirm a Bearish price target. POT appears to be in a Stage 4 right now which is why I went short.

Thanks in advance...

The reason for the bullish price objective is that the last buy or sell signal it gave was a buy signal when it made a double top breakout on the previous column of Xs.

A High pole patterns is not a direct indicator to sell, it is instead a warning of a potential downward reversal, as the price has moved below 50% of the most recent up move as measured by the previous column of Xs. So in this case what you are seeing is a stock that's below it's Bearish Resistance Line (i.e. in a downtrend), that had given a short term buy signal within the overall downtrend, and is now warning that that short term buy signal could fail and hence could continue lower. But high pole patterns are generally more significant at tops, on parabolic moves up and sudden reversals below 50% of the previous column, and not minor moves like this one.

Also, if you move back to view the traditional P&F chart, there was no short term buy signal given and it's still showing as in a downtrend with heavy resistance above.

Basically it's in Stage 4 still, so place your stop loss where you are comfortable and let it play out imo.