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.
Penny stocks are a universe unto themselves; they can be an exhilarating way to speculate but keep that in mind: With Vegas odds of winning, make sure you only play penny stocks with Vegas money you can afford to lose.
Go Long This Bullish Continuation Wedge
During the market’s worst-performing day of the year, Grizzly Gold Corp. (NASDAQ:GRZG) gave off four bullish signals. The most compelling for traders is the Bullish Continuation Wedge. This pattern tells us after a temporary interruption, the prior uptrend is set to continue. A Continuation Wedge (Bullish) represents a temporary interruption to an uptrend, taking the shape of two converging trendlines both slanted downward against the trend. During this time the bears attempt to win over the bulls, but in the end the bulls triumph as the break above the upper trendline signals a continuation of the prior uptrend.
Recommendation: Buy GRZG at current levels with an upside target of 73 cents to 83 cents in 21 days; use at stop at 17 cents.
Ride a Bearish Symmetrical Continuation Triangle Down to Profits
Idera Pharmaceuticals (NASDAQ:IDRA) technical pattern tells us the price has broken downward out of a consolidation period, suggesting a continuation of the prior downtrend. A Symmetrical Continuation Triangle (Bearish) shows two converging trendlines as prices reach lower highs and higher lows. Volume diminishes as the price swings back and forth between an increasingly narrow range reflecting uncertainty in the market direction. Then well before the triangle reaches its apex, the price breaks down below the lower trendline with a noticeable increase in volume, confirming the pattern as a continuation of the prior downtrend.
Recommendation: Short IDRA at current levels with a downside target of 15 cents to 5 cents in 23 days; use a stop at $1.05.
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.