3 Top Stocks Currently in Rising Wedge Patterns

Jun 23, 2015: 9:49 AM CST

Which three “Top Stocks” in the S&P 500 with Rising Wedge price patterns are we highlighting?

Let’s take a look at the pattern and these three big names from our scan:

We’ll start with MasterCard (MA):

The Rising Wedge pattern is also called the “Bearish Rising Wedge” pattern, but the pattern ONLY takes a bearish turn (signal) when price breaks under the lower rising trendline.

Until that happens, the pattern is actually quite bullish and represents a strongly uptrending stock.

The goal is to play (plan) trades within the compressing trendlines, often buying retracements or breakouts as price moves higher in its trend.

Continue this “buy retracement in a trend” strategy until price does break through the lower trendline.

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When trading a “Rising Wedge” pattern, note the following:

  • Lower Support Trendline (often a buy point until price breaks under it)
  • Midpoint (which acts like a Magnet or anchor for a “Rubber Band”)
  • Upper Resistance Trendline (a target and place for aggressive traders to sell short)

I used the quick scan (screen) tools from FinViz.com and highlighted these three S&P 500 candidates.

For Mastercard (MA), we see clearly compressing trendlines focusing on the $95.00 per share level.

The lower support trendline – a sell-short signal if broken – currently appears at the $94.00 level.

As the trendlines converge (and price overlaps), energy builds for a future breakout.

Here’s another top stock which is also a Dow Jones component – Honeywell (HON):

Honeywell (HON) does not have the clearly defined trendlines as Mastercard, but we still see the Rising Support line into $104.00 per share and the Midpoint just above $106.00 per share.

The rising upper trendline target extends beyond the scale of this chart but appears near $109.

Watch the $104.00 support and the prior $102.00 per share low for a possible downside trigger to reverse this strong – but potentially weakening – uptrend.

Our final candidate is Accenture (ACN):

Like Mastercard (MA), Accenture (ACN) shows a compressing trendline pattern forming around a Midpoint.

The estimated levels are $96.00 for the support line, $98.00 for the Midpoint, and $100.00 for resistance.

Again, the general idea is to play trades within the range as buyers and sellers play ping-pong, bouncing price between these levels (centered around a rising midpoint).

These are just three leading names – you can seek out additional candidates from your stock scans.

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Corey Rosenbloom, CMT
Afraid to Trade.com

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3 Comments

3 Responses to “3 Top Stocks Currently in Rising Wedge Patterns”

  1. Brian Says:

    Good post and solid analysis. MA and ACN both show some bearish divergence on the MACD so I would be cautious with long trades here. I’ll definitely keep an eye on MA, thank you for putting it on my “radar”.

  2. Corey Rosenbloom Says:

    Thanks Brian!

    Indeed – I wanted to keep the post simple and focused mainly on price but indeed, you caught the divergence and warning signs from momentum and volume in these stocks. Great work!

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