Stocks are at all-time highs, but that doesn’t mean there’s no opportunity for additional upside. It’s a stock-picker’s market, and the Trending123 Pattern Scan has identified a bullish pattern you might want to watch in Rite Aid (RAD).
Click to Enlarge A symmetrical continuation triangle shows two converging trendlines: the lower one is ascending, and the upper one is descending. The formation occurs because prices are reaching both lower highs and higher lows. The pattern will display two highs touching the upper (descending) trendline and two lows touching the lower (ascending) trendline.
This pattern is confirmed when the price breaks out of the triangle formation to close above the upper (descending) trendline.
Volume is an important factor to consider. Typically, volume follows a reliable pattern: volume should diminish as the price swings back and forth between an increasingly narrow range of highs and lows. However, when the breakout occurs, there should be a noticeable increase in volume. If this volume picture is not clear, investors should be cautious about decisions based on this triangle.
Price Moves Above Resistance Level
You can also check that the prices following the pattern have crossed above a key resistance level such as the 200 day moving average, represented by the red line on the chart. This provides extra confirmation that the trend is poised to continue upward.
Target Price: $3.55 – $3.65
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.