$OSK stock in Rectangle Channel Pattern- It consist of two trendline parallel to each other having points forming equal highs and equal lows, thus forming a rectangular or box shape. The price is confined between the two trendlines. It consist of the following- Lower Trendline is also known as a support Level and Upper Trendline is called A resistance level.
This pattern is formed when there is a tough competition between the bulls and the bears, no body is ready to give up resulting in equal highs and equal lows. That is why this pattern is also known as consolidation zones.
Breakout can occur in any direction upside or downside. If the breakout is in upside direction, it indicates that the bulls have taken over bears and indicates a buy signal. However if the breakout is in downside direction it indicates selling pressure or victory of bears over bulls and indicates a sell signal.
In this case, the stock is clearly trying to break to the upside. Price targets are usually defined by calculating the difference between upper and lower trendlines and adding that difference to the the breakout price. Here in this chart the price difference is $10, if we add this to the breakout price of $74.13 the price target comes out to be $84.13. It is wise to mark a profit taking zone around target price so that you can take some profits and adjust your stops.
Confirmed Uptrend- Following chart (daily) goes back 7 years and it is clear in this chart that trend direction is from lower left to upper right, which indicates that underlying security is in an uptrend.
Critical price level- A long-term trendline which has proved itself as a strong resistance or support level are considered critical price level. In $COST chart you see clearly marked points on a Horizontal trendline @162.81
Point 1 – 12/8/2015 Advancing prices came to a halt and reversed at this point.
Point 2– Between 7/11/2016- 8/23/2016 there is a congestion zone where prices couldn’t break above previously defined resistance point 1 and eventually headed lower.
Point 3 &4– Price managed to break above the resistance line but soon reverse course and head lower only to hover around resistance line at 162.80. Notice at point 4 price seem to hit a ceiling until they break out. Later, resistance starts acting as support.
Point 5– after recent drop I expect the stock to find support at our price 162.81, before it makes its next big move.
However, If this support level doesn’t hold prices might head down to $146-$153. This price zone has previously acted as an important support and resistance zone.
Potential ABC Bullish candidate?
This area also serves as a potential retracement zone for ABC bullish pattern Where point 6 =A, point 7=B and and C will be somewhere in the highlighted area. If there is a point C in the highlighted zone BC will be equal to .62 to .76 of AB, which is a desirable number for ABC pattern to be proven valid.
MDLZ [Mondelez International] is showing symmetrical triangle pattern. It is bounded by 2 converging trend lines on both sides. It is very hard to predict the direction of breakout. Only way to find out is by continuously watching the stock price action or by following my blog 🙂 I will continue to update my post as breakout happens.
According to Market Watch, $NKE reported 68cents/share of EPS, beating the consensus of 58cents/share. But analysts weren’t happy as they attributed this to lower expenses rather than higher revenue.
It made the stock drop after-hours and then it gapped down the next day. However, as I mentioned in my previous $NKE post on 2/9/2017(see below), A long-term bullish support line is in place and that’s where the stock stopped and rebounded from. I expect the stock to fulfill the gap and reach the target of $59.63.
CHANNEL- A channel is formed by a trendline and another line drawn parallel to the trendline surrounding a continuous price move. Main purpose of channel is to define the volatility of the price move and indicate breakouts and hence clear entry points. In the chart shown below, we can see that $NKE has been moving in a channel for some time. Coincidentally, there is another important technical signal in sight. A penetration of long standing Bearish Resistance Line. The downward trendline, drawn across the highs, is a bearish resistance line. This angled trendlines is most reliable when used to identify major price trends and penetration signals reversal might be coming.
Following is the chart from 1/27/2017, where developing channel is identified.
$Wynn has been trading in a range since 4/16. Please see chart A.There is a symmetrical triangle pattern developing within horizontal consolidation. Entry and Price Targets are clearly listed in the chart B. It is very important to stick to pre-decided prices to exit and enter the trade.
This shift in pattern from channel to triangle reveals interesting psychological behavior of traders. They are growing less confident of the direction of the trend and nobody wants to hold the stock for too long, which results in lower highs and higher lows. See numbered pivot points in chart B. Upper resistance line is showing lower highs and lower support line is showing higher lows.
Larger formations represent periods of greater uncertainty. They may be followed by another symmetric triangle, again indicating that traders are undecided about direction. If the symmetric triangle is resolved in the current trend direction, the trend is in full force, and a large price move is expected.
Triangles can be consistent indicators of investor confidence. Because they reflect human behavior, they are not always perfect in appearance and not always consistent in pattern. It takes experience to identify the formation in a timely manner.