QBE Insurance Group Ltd (QBE)

Welcome to Bravechart. Your in-depth article on chart analysis from a Scotsman stationed in the Outback.

As traders, we use technical analysis as a reliable method for speculating on future price direction of both equities (shares) and indexes. Technical Analysis in simple terms is the study of historic price movements in a chart in search of patterns or consistently traded support and resistance levels. Today we are looking at a specific chart pattern that falls under continuation patterns, the Descending Triangle.

Appearance:  A Descending Triangle pattern is comprised of:

  • A down trending stock that has lower peaks and troughs.
  • A support level where the stock is channeling towards.
  • Both trend lines create a triangle forming in the bottom right of your chart.

Important Note: Be aware, this pattern will not be confirmed until the share price breaks through the support level and continues the downtrend.

Example: QBE Insurance Group Ltd (QBE)

QBE has been on a short-term downtrend for over a month now, when the share price had rebounded after hitting a key support level at $11.25, then starting the descending triangle at $12.35. Ever since this point, we have seen the share price slowly falling and it has recently tested key support at $11.61 once again, after touching this level twice before. With the chart below now showing a signal that a descending triangle has formed and getting tighter to the point of the triangle, we will likely see QBE break out soon. The move does still have a couple more days to go to play out, but at this stage we are witnessing a descending triangle pattern. The key levels to watch are if QBE breaks the downtrend or sells off quickly and trades below the support level. If you are following Carlo’s trading rules, you will remember that once a stock has broken out of triangle, it will likely continue in that direction for a few days.