The following stock chart of Google (GOOG) offers a great example of a symmetrical triangle. Symmetrical Triangles are a basic form of technical analysis spotted in both uptrends and downtrends. Depending on which way the stock breaks out of the pattern a long or short position can be entered.
Note: this chart of Google (GOOG) is a seven month daily stock chart:
1. The blue “1"s show us how Google formed the top half of its symmetrical triangle.
2. The blue “2"s show us how Google formed the bottom half of its symmetrical triangle. The red "2" is where the pattern broke and the bears took control of the stock. This would be a great entry point for a short position (a bet that the stock is going to go down). As can be seen in the chart Google dropped from $675 to under $450 (-33%) over the next two months.
3. The blue “3"s offer and example of a bear flag or what is known as an ascending channel (view a example of a descending channel). This is formed when the stock is already in a downtrend and forms a channel to the upside which is commonly mistaken for a bottom. The red "4" denotes where Google fell out of this pattern and re-continued its downward trend to lower lows.
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- Example 4, Google (GOOG) <– Currently Viewing
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