Triangle Formations

I've noticed a lot of triangles in charts recently. When a stock breaks out of its triangle, that's when you put on a trade. If a stock breaks out to the upside, like GLD did, it will continue higher. If a stock breaks down, as FLR and PCU have done, it will continue lower.

PCU has been in an uptrend since 2003. It has moved from roughly $10/share to $140/share. Now the stock is at a critical level. It is about to violate its uptrend support line that has been in place for 5 years. This support line currently lies close to $75 - coincidentally this price level corresponds to the pivot high reached in February 2007 and the pivot low reached in August 2007. The party could be over for PCU. Check out the nasty MACD destruction. We may see a short term bounce, but the next few months will be the moment of truth for PCU. The 1-year, daily chart also shows that PCU has broken down below a symmetrical triangle.



FLR has also formed a symmetrical triangle and broken to the downside. It might have a tough time regaining its footing. I think the technical outlook is bearish for now.


GLD, the ETF that tracks the price of Gold, also formed a triangle, but it broke out to the upside. I'm bullish - can't argue with the trend.