Bulkowski's York Water Trading Quiz

The symmetrical triangle has an upward breakout. Patterns are not easy to find in this stock because price seems to be quite volatile (thinly traded with wide trading ranges intraday).

Answer 1 (buy?): Buy because of the upward breakout.

Answer 2 (target?): Since there is little overhead resistance, use the measure rule. The height of the triangle is 18.85 - 15.65 = 3.20. Add this to the breakout price of 17.75 for a target of 20.95. Price reaches the target 58% of the time, so you can multiply the height by 58% to get a more conservative target.

Answer 3 (stop?): I think a good stop would be below the pattern as I have shown at point A. You might want to run volatility on it to make sure it's not too close, but there's a good measure of support above the point and I think it will work well.

Price has climbed since the breakout. What do you do now? To answer that, look for additional chart patterns. That will determine if you should make any changes to your position.

What patterns can you find after the throwback?

Price has thrown back to the ascending triangle top. Do you hold on, buy more, or sell?

It's easy to determine a sell point in hindsight, but not in real time. I extended the two trendlines from the ascending triangle forward. You might want to sell if price closes below the intersection of the two lines (near the green sell line). Even a close below the magenta sell line, setup as a long trendline from the October lows, would work well.

Price touched 21.04, just pennies above the 20.95 target. If you had placed a sell order at that price, you would have traded this one perfectly!