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 stocks for traders to take advantage of.
Buy the Continuation Diamond
The price has broken upward out of a consolidation period, suggesting a continuation of the prior uptrend. The pattern begins during a downtrend 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 upward out of the diamond’s boundary lines, it marks the resumption of the prior uptrend
Recommendation: Buy SIRI for a $3.41 – $3.47 intermediate-term target, with a $2.85 stop.
Short the Descending Continuation Triangle
Click to EnlargeCentral European Media Enterprises (NASDAQ:CETV) is a company that broadcasts and produces entertainment media in six central and eastern European markets. It has developed a descending continuation triangle in its stock over the past 17 days.
The increasingly lower highs and constant lows within this pattern tell us that sellers are more aggressive than buyers, confirmed by a break down through a support level to signal a continuation of the prior downtrend. A descending continuation triangle, with its increasingly lower highs and constant lows, indicates that sellers are more aggressive than buyers. The pattern typically forms because a demand for shares is available at a certain price, represented by the lower flat line propping the price up. But when the supply depletes, the shares quickly break down below the bottom boundary line and move lower.
Recommendation: Short CETV for a $2.75 – $2.90 target, with a $4.64 stop.
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 and Trending123. 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.