Akamai Technologies (AKAM) is one of those all-important names as we head into earnings season–and after it reported last week, the Trending123 Pattern Scan powered by Recognia has identified AKAM’s price moving in a way that suggests a move even higher.
Click to Enlarge Specifically, the price action on Akamai has shown a symmetrical continuation pattern. Such a pattern usually develops after a consolidation period like the one we saw in AKAM this spring. Now the pattern shows two converging trendlines as prices reach lower highs and higher lows.
You should pay close attention to how long the triangle takes to develop to its apex. The general rule is that prices should break out – clearly penetrate the upper trendline – somewhere between three-quarters and two-thirds of the horizontal width of the formation. The break out, in other words, should occur well before the pattern reaches the apex of the triangle. The closer the breakout occurs to the apex the less reliable the formation.
Typically, 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.
This pattern in AKAM has developed over the past 51 days, making this an intermediate-term trade opportunity.
Price Target: $52.75 – $54.50
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.