subject: Fantastic Day Trading Chart Patterns [print this page] One of my preferred day trading chart patterns to swing trade over a shorter time frame is the Symmetrical Triangle.
The Symmetrical Triangle pattern is kind of odd as it looks as if emotion picks up as the price moves closer into the head of the chart pattern then it abruptly does a breakout.
The projected target of the breakout move is equivalent to the distance the stock moved going into the formation.
But you ought to use the Symmetrical Triangle formation in conjunction with other technical indicators like the MACD.
The MACD needs to have the signal and the divergence lines both trending higher.
For knowing the best time to sell after the breakout occurs, I prefer to implement the Slow Stochastic. What I will do is tweak my Slow Stochastic settings for the stock or market I am stock trading. You can check out the earlier video I did about the dynamic tool I use to do this in a few seconds. Once you have the settings for your stock trading style and that have given at the very least 3 good buy and sell signals, you will have your exit level.
For the Market Vectors Steel ETF (SLX), the optimized Slow Stochastic settings are 4, 4, 2.
The idea 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. We have had a perfect Fibonacci retracement of 38.2% after the Symmetrical Triangle breakout. The Slow Stochastic is back closer to oversold territory.
You have to look out though because the 50 day moving average is below the 200 day moving average but the 50 has turned up.
On a basic level, I like steel and understand why it did a Symmetrical Triangle breakout. As the international economic recovery picks up pace, steel consumption will explode upward as economic activity spurs construction and the consumption of steel.
I understand we read a lot about a double dip global downturn but I just do not think that is really likely now after the second quarter 2010 earnings season. Some 60% to 75% of all businesses reported an increase in earnings year over year.
Another thing you have to keep in mind is that fear sells and media groups are masters of this marketing concept. What headline do you think generates more interest, "Global Economic Recovery Slows But Continues" or "Fed Closes 5 More Banks, Teeters On Global Collapse"? Everybody wants to know the spooky and bloodcurdling particulars of such an surprising, attention grabbing headline. The first headline is so, yawn, well, right, yippe ki-yay and let us all hold hands and sing Kum bay ya, my Lord, kum bay ya.
You as well are going into the November 2010 elections so you have Republicans and their sham Fox News attempting to talk down the economy and truly who do not want an economic recovery before November.
Then you have your gold ingots which usually are Republicans, and who have a large financial interest at risk in the U.S. dollar declining and other gloom and catastrophic economic stats. The plan being they do not want an economic recovery as they want everybody scared and running out buying gold.
Lastly, you have media groups like Fox News combining both Republican politics of trying to stop an economic recovery before November, and gold bugs by combining the mutually shared welfare of the two. That is why you had Glenn Beck, Bill Oreilly and a few others taking money from gold corporations like Gold Line.
