Bearish triangle This bearish triangle pattern is called the bearish symmetrical pattern. It is a continuation pattern. During this period the stock will form a triangular pattern and finally breakout. The breakout will be to the downside if this is a bearish symmetrical triangle.
Why is this a bearish pattern? When the pattern is forming the prices contract and the difference between the highs and lows gets shorter. It is bound to break out either to the upside or downside eventually and that breakout tells us where the stock is likely to go in the near future.
volume The volume of this triangle will typically be decreasing when it is being formed. During the breakout however you would expect to see a rise in volume. This rise in volume give greater credibility to the breakout. target The target is found by measuring the difference between top of resistance and the bottom of support when the figure formed. In this figure the top of resistance is around $40. The bottom is around $32.75. The difference is $7.25. So we would expect this stock to go down $7.25 from where it broke out at or $33.75. That gives us a target of $26.5. trading the pattern Many traders will trade the pattern by shorting when the stock breaks resistance and placing a stop above resistance. Other Chart Patterns Chart patterns occur naturally in the market and can be used as an indicator for the future price of a stock. Some other patterns are; Head and Shoulders - This pattern marks the end to a trend. Ascending Triangle - A bullish pattern Cup and Handle - A strong indicator to the upside
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