All day I scan the charts looking for technical patterns to trade, both to the long and short sides. My Trending123 Pattern Scan powered by Recognia is one useful tool I have to scan the markets quickly, and it is showing two technical events in these financial stocks for traders to take advantage of.
An Easy Upside Breakout
The charts are giving traders a green light to go long LinkedIn (NYSE:LNKD). LNKD’s pattern tells us that the price broke upward out of a trading range suggesting we’re entering a new uptrend. The Upside Breakout pattern represents a trading range in which prices move sideways between two parallel horizontal lines. It’s often a pause or congestion area within an existing trend though sometimes the breakout results in a reversal to the prior trend. Either way, an upside breakout through the upper resistance line signals an end to the consolidation period and the start of an uptrend.
Recommendation: Buy LNKD at current levels with an upside target of $197.00 to $200.00 in just 21 days; use at stop at $147.79.
Short This Diamond Top
Heartland Payment Systems (NYSE:HPY) has several bearish patterns in play, all pointing to a short-term drop. The most powerful pattern on its chart is the diamond top. This pattern tells us the price seems to have reached a top, showing signs of reversal as it has broken downward after a period of uncertainty or consolidation. The Diamond Top pattern begins during an uptrend as prices create higher highs and lower lows in a broadening pattern. Then the trading range gradually narrows after the highs peak and the lows start trending upward. When the price breaks downward out of the diamonds boundary lines, it marks a significant reversal to a new downtrend.
Recommendation: Short HPY at current levels with a downside target of $27.80 to $27.00 in just 47 days; use a stop at $34.75.
InvestorPlace advisor John Lansing tracks the charts all day and offers expert technical analysis in his day trading, options and trading services: Power Trading at the Open, Parabolic Options andTrending123. Trending123 members receive access to the Trending123 Pattern Scan powered by Recognia free as part of their membership. For more information on which service is for you click here.