Symmetrical Triangle on FMG
After a strong trending period on a stock, there usually comes a period of consolidation. In the last 18 months many stocks have had a sharp down trend, and now many are consolidating.
A common form of consolidation that can be seen on the charts is a Symmetrical Triangle. What is the definition of a Symmetrical Triangle? When two trendlines that connect a series of lower peaks and a series of higher troughs. Both trendlines act as support and resistance that prevent the stock from heading higher or lower, but once the price breaches one of these levels, a sharp movement often follows. A Symmetrical Triangle is an indication of indecision in the market.
FMG is a stock that has Symmetrical triangle formed on the weekly chart. A break either way gives room for movement before another support or resistance. If there is a bullish breakout a test of $3.35 resistance could be expected. A bearish breakout would likely see a test of support at $2.25.
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November 15th, 2009 at 4:35 am
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