The Trending123 Pattern Scan powered by Recognia has identified a bullish continuation wedge pattern in Yahoo (YHOO), a stock that has recently seen mixed earnings results. If the pattern is confirmed, this is good news for swing traders looking for an intermediate-term trade to get into.
A continuation wedge represents a temporary interruption to an uptrend, taking the shape of two converging trendlines both slanted downward against the trend. Over the weeks or months that this pattern forms, the trend appears downward but the long-term range is still upward. 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, signaling a continuation of the prior uptrend.
Crossing above a resistance level such as the 200 day moving average, as YHOO did in the middle of July, provides extra confirmation that the trend is poised to continue upward.
Target Price: $30.10 – $30.70
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.