Zee TV - Contracting for a Breakout!

Zee TV - Contracting for a Breakout!

After consolidating for over three months, ZEE TV seems to have completed the formation of a symmetrical or contracting triangle pattern.

The symmetrical triangle is best described as a continuation pattern, a formation that represents a slowdown or consolidation in a trend – whether an up or downtrend.

Symmetrical Triangles are areas of indecision. The market pauses and the direction is questioned. Typically, the forces of buyers and sellers are equal.

ZEE TV is forming a typical symmetrical triangle pattern

The symmetrical triangle, which can also be referred to as a coil, usually forms during a trend as a continuation pattern. The pattern contains at least two lower highs and two higher lows. When these points are connected, the lines converge as they are extended and the symmetrical triangle takes shape. You could also think of it as a contracting wedge, wide at the beginning and narrowing over time.

Why is the symmetrical triangle pattern important?

A symmetrical triangle pattern is relatively easy to identify. In addition, triangle patterns can be quite reliable to trade with very low failure rates. There is a caution concerning trading these patterns. A triangle pattern can be either continuation or reversal patterns. Typically, they are continuation patterns. To achieve the reliability for which the triangle is well known, technical analysts advise waiting for a clear breakout of one of the trendlines defining the triangle.

Triangle patterns are usually susceptible to definite and dependable analysis, with the proviso that the investor must wait for a reliable, as opposed to a premature, breakout. The failure rate for triangles drops significantly if the investor waits for a valid breakout and, once that breakout occurs, the pattern proves strongly reliable.

Is volume important in a symmetrical triangle pattern?

Volume is an important factor to consider when determining whether a formation is a true triangle. Typically, volume follows a reliable pattern: volume should diminish as the price swings back and forth between an increasingly narrow range of highs and lows. However, when breakout occurs, there should be a noticeable increase in volume. If this volume picture is not clear, investors should be cautious about whether the pattern is a true triangle.

This traditional volume pattern develops because of investor sentiment during the creation of a triangle. Investors are uncertain. This uncertainty means that they are buying and selling sooner, which translates into a narrowing of the highs and lows, creating the "coil" shape, indicative of the triangle . Because investors are uncertain, many are holding on to their stocks, awaiting the market's next move. When breakout finally does occur, there's a surge in market activity because investors are finally certain enough about the direction of the market to release their pent-up supply or demand.

See attached chart of ZEE TV forming a symmetrical triangle pattern.

Have any questions?? Please post them here!

Please visit this forum tomorrow for an update on the direction of breakout and trading signal.

Attached Images

zeetv20040720.gif (23.2 KB, 119 views)

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Best Wishes!

Traderji

www.Traderji.com

Dear Traderji,
R u advising to buy zee @130?
Along with zee,pls suggest scrips for delivery..
Could u pls guide me in this regard?
My plan is to invest 1lac now.
thanks

regards
mohan

mojac,

You have to wait for a confirmation of the breakout.

If you have an upside breakout, it will be a BUY signal, a downside breakout will be a SELL signal.

At the moment traderji is just informing us of the pattern setup!

I am sure traderji will inform once a breakout happens.

Yes chart posted by you of Zee tele is good no doubt about it. break out from symetric triangle will bring good chunk of buying and will dance to the tune of bulls.Keep it up....

Dear friends,
Suggest some scrips for delivery with targets,pls .......

mojac wrote...

&
My philosophy is to make you LEARN and EARN.

I want you all to be independant to make you own profitable trading decisions.

I will provide trading signals with reasons (which will be educational) as to why I think a particular stock is a good buy.

Please be patient and visit the forum regularly. I am sure you will not be disappointed.

__________________
Best Wishes!

Traderji

www.Traderji.com

Zee TV - Upside Breakou!!

CONGRATULATIONS Traderji sir,

Excellent Analysis, Zee TV has given a breakout of your triangle analysis.

Continue the "Learn & Earn" topic.

Again KEEP UP THE GOOD WORK!!

Many Thanks.

Good call Traderji,

I hope all members were able to take advantage of this profitable analysis.

Can you now further give us an idea about the profit levels and stoploss??

Thanks.

Thank you all for your comments.

ZEE TV has confirmed an UPSIDE BREAKOUT.

If you have not yet bought ZEE TV you can do so NOW!

Now that we have bought ZEE TV what will be the levels to book profits??

Level to keep your stoploss??

Well here we go...

Price Target

There are two methods to estimate the extent of the move after the breakout.

First, the widest distance of the symmetrical triangle can be measured and applied to the breakout point.

As can be seen from the attached chart the widest distance is 152.00 - 113.00 = 39.00.
If we add 39 to the breakout level of Rs. 130.00 it gives us a profit price target of 169.00

Second, a trendline can be drawn parallel to the pattern's trendline that slopes in the direction of the break. The extension of this line will mark a potential breakout target.
This gives us alevel anywhere between 160.00 to 165.00.

So we stay conservative and keep our profit target of 160.00 to 165.00

Stop Loss Level

I would suggest a level of Rs. 127.00-128.00 for the stoploss level as this is slightly below the breakout point.

If you have any questions please post them here.

Attached Images

zeetv20040723.gif (23.0 KB, 25 views)

__________________
Best Wishes!

Traderji

www.Traderji.com

hi TRADERJI

Seems to be a good forum! I went long on zee on 22nd at 134 upon breakout though I did not wait till end of day as volumes were good and the counter was strong.

Triangles are good for traders. recently I went long on adlabs/ivrcl/icicibank based on breakouts.