Back to School With an Office Depot (ODP) Bullish Continuation Diamond

Watch ODP for the breakout

   

The Trending123 Pattern Scan powered by Recognia has identified a bullish continuation diamond in Office Depot (ODP), a company that parents have on their minds this month with school supply shopping. The stock has developed this pattern over the past 59 days, so this trade should take at least that long to reach the target price.

Let’s dive into the details of the pattern though.

8 14 13 odp 300x260 Back to School With an Office Depot (ODP) Bullish Continuation Diamond
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Diamond patterns usually form over several months in very active markets, beginning in 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.

The inbound trend is an important characteristic of the pattern. A shallow inbound trend may indicate a period of consolidation before the price move indicated by the pattern begins. Look for an inbound trend that is longer than the duration of the pattern. A good rule of thumb is that the inbound trend should be at least 2 times the duration of the pattern. Recognia reports that the inbound trend for ODP is 169 days so this chart falls well within the rule.

Target Price: $5.05 – $5.20

Stop: $3.89

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 OpenParabolic Options and Trending123.  Trending123 members receive access to the Trending123 Pattern Scan powered by Recognia free as part of their membership.


Article printed from InvestorPlace Media, http://investorplace.com/247trader/back-to-school-with-an-office-depot-odp-bullish-continuation-diamond/.

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