Hammy’s Online Trade Journal

I noticed an ad for the “Investors Blog Network” on the side-panel of Zachstocks.com, and saw a site that really caught my eye. It’s called “A Trade A Day”. Check it out here. There are so many good investing blogs out there, and I’ve found most of the ones I really like by listening to The Disciplined Investor podcast by Andy Horowitz

Today on Trade A Day, Jonathan explained what Triangles are in stock charts. Triangles, as I will briefly summarize, are chart patterns created by creating two lines: one which runs through  a stocks’ highs, and another which runs through a stock’s lows. The idea is that if the high peaks and low troughs are all linear, you can really tell something about the support and resistance of a stock’s movements.

I first learned about stock patterns from How to Make Money In Stocks, and am pretty interested. I really like technical analysis, and think it makes sense. The triangle, like the cup-and-handle, is another easy to identify pattern. There are three types of triangles:

1. Ascending base triangles. These have a flat top (resistance), and an ascending bottom leg (support). The support leg rises over time to eventually meet the resistance, and according to Jonathan (and good sense), the stock will be very profitable once it breaks through the resistance line WITH high volume (+50%-100% above average). Here’s a good example of a triangle with an ascending base (image linked from A Trade A Day) :
2. The second kind of triangle is a decending resistance with flat support, which Jonathan says is usually bearish. I guess, instead of breaking through resistance at the top, it breaks through the floor of support. Here’s an example of one of these (linked as above:)
3. Finally, is the sideways triangle where both the support is ascending and resistance is descending. This, according to Jonathan, is indicative of a direction less market, and tells us there is no clear support or resistance to follow. Here’s a stock you may have heard of:                              

Triangles can be read about both at A Trade A Day, and at this page in Investopedia.com .