Welcome to Bravechart. Your in-depth article on chart analysis from a Scotsman stationed in the Outback.
As traders, we use technincal analysis as a reliable method for speculating on future price direction of both equities (shares) and indexes. Technical Anyalysis in simple terms is the study of historic price movements in a chart in search of patterns or consistantly 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 channelling 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: Sonic Healthcare Limited (SHL)
Sonic Healthcare has been on a downtrend for over five months now and has found some support around the $21.38 level. The share price has thus found itself falling under the Descending Triangle pattern and is now getting close to the point of the triangle. With the point of the triangle looking to be around $21.50, it could be about to break from the pattern and start to reverse for a small period and head back to test resistance at $22.50. If on the other hand we continue bearish, the next support level is $20.85.
There are many ways that you could take advantage of these patterns. As a specialist in derivatives, we are able to profit on a stock when it falls as well as when it rises.
If you would like to learn how to pick a stocks direction, then Join us at our live face to face one day “Technical Analysis, Picking the Direction of a Stock” course.
Contact us today on 03 8080 5788.
Regards,
Benjamin Farkas
TradersCircle