subject: The Best Day Trading Chart Pattern [print this page] The Symmetrical Triangle formation is kind of strange for the reason that it looks as if emotion increases as the market moves closer into the head of the formation then it abruptly does a breakout.
The expected target of the breakout move is equal to the distance the stock traveled going into the pattern.
However you ought to use the Symmetrical Triangle formation in conjunction with other technical indicators like the MACD.
The MACD ought to have the signal and the divergence lines both trending higher.
For understanding when to sell after the breakout occurs, I like to use the Slow Stochastic. You can see the previous video I did about the dynamic gizmo I use to achieve this in a couple of seconds. When you have the settings for your trading style and that have generated at the very least three reliable buy and sell signals, you will have your exit level.
The goal is to buy as soon as the stock does a breakout, and exit out of the market on the Slow Stochastic cross of the %K and %D lines.
I dig this stock chart as well for a possible re-entry. The Slow Stochastic is back closer to oversold territory.
You must look out though because the 50 day moving average is below the 200 day moving average but the 50 has turned up.
On a fundamental level, I like steel and know why it did a Symmetrical Triangle breakout. As the worldwide economic recovery picks up speed, steel consumption will explode up as economic activity spurs construction and the consumption of steel.
I understand we hear a lot about a double dip international recession but I just don't imagine that is very likely now after the second quarter 2010 earnings season. An estimated 65% to 75% of all companies reported an increase in earnings year over year.
Something else you should bear in mind is that fear sells and media groups know this. What headline do you think sells more, "Global Economic Recovery Slows But Continues" or "Fed Closes 5 More Banks, Teeters On Global Collapse"? Everyone wants to know the spooky and creepy particulars of such an amazing, attention grabbing headline. The first headline is just, yawn, well, right, yippe ki-yay and let us all hold hands and sing Kum bay ya, my Lord, kum bay ya.
You also are going into the November 2010 elections so you have Republicans and their bogus Fox News attempting to talk down the economy and truly who do not want an economic recovery before November.
Then you have your gold bugs which usually are Republicans, and who have a large financial interest at risk in the U.S. dollar falling and other gloom and catastrophic economic stats. The scheme being they do not want an economic recovery because they want everyone spooked and running out purchasing gold.
Lastly, you have news groups like Fox News bringing together both Republican politics of attempting to prevent an economic recovery before November, and gold bugs by combining the reciprocally shared wellbeing of the two.
The Best Day Trading Chart Pattern
By: Morton Sargent
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