Today BT Group shares surged by as much as 5%. The move was triggered by a positive announcement this morning, in particular, the company raised its full year cahflow target after cutting jobs.
While no one can predict the outcome of any announcement, the chart's pattern over the last two months was bullish, see chart
We discussed HSBC the other day, today we have another pause in the uptrend pattern in BT. Consolidations or pauses in the uptrend are generally sideways moves in five waves [A,B,C,D,E]. Now observe wave B and D, they are both in three legs [a,b,c]. This is what you would expect in a consolidation. If it was not a consolidation, prices would continue to move up in five waves but here these small rallies are in three legs and are followed by a pull back.
The third pull back which is wave E marks the end of the consolidation. This is where you would buy.
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