All day I scan the charts with my Trending123 Pattern Scan looking for technical patterns to trade, and my system has identified three bullish symmetrical continuation triangle patterns that have developed over the past 17-18 days in tech and Internet stocks.
It’s not uncommon for related stocks to trade in a similar pattern, as you’ll see with Yahoo (YHOO), Take-Two Interactive Software (TTWO) and Brightcove (BCOV). So let’s get into the nitty-gritty of how to identify that pattern.
A symmetrical continuation triangle is comprised of 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 out above the upper trendline with a noticeable increase in volume, confirming the pattern as a continuation of the prior uptrend.
In all three stocks, price has broken upward out of a consolidation period, suggesting that the pattern has been confirmed. However, all have different target prices and stop losses based on previous highs and lows in the stocks.
Yahoo Symmetrical Continuation Triangle
June 10 closing price: $26.74
Target price: $28.40 – $28.90
Take-Two Interactive Software Symmetrical Continuation Triangle
June 10 closing price: $16.54
Target price: $18.50 – $18.90
Brightcove Symmetrical Continuation Triangle
June 10 closing price: $8.10
Target price: $8.80 – $9.10
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.