Yahoo YHOO Building Toward a Triangle Breakout

Apr 29, 2015: 10:27 AM CST

If you’re trading Yahoo! (YHOO), you may have a breakout trading opportunity shaping up as price consolidates into a visual triangle ahead of a likely breakout.

Let’s study the pattern, note the breakout levels, and highlight possible targets on a successful breakout impulse play.

A Triangle Trading Pattern (education link) occurs when price consolidates into equilibrium between buyers and sellers as price trendlines narrow to a “Midpoint.”

I highlighted the current daily chart Triangle on Yahoo’s chart above.

Pay close attention to the rising support of the 200 day Simple Moving Average (SMA) currently into the $43.50 per share area and the falling price-based trendline (and prior price high) near $46.00 per share.

The expectation is that price will shift into a breakout mode beyond one of these levels, generating a trade idea.

We could actually see a downside break trigger soon – watch the $43.00 level very closely.

Note the downside (red) breakdown price pathway toward $42.00 (first target) then the $38.00 level should sellers win the supply/demand battle on the chart.

However, should buyers hold the current support and then generate a future breakout above the $46.00 per share level, then Yahoo (YHOO) would be a potential bullish breakout buy candidate to trade toward $50.00 then perhaps $52.00 again.

If you do take a directional breakout trade, place your stop on the opposite side of the trendline (triangle).

We can zoom-in closer and draw a Fibonacci Grid that reinforces the current consolidation and breakout levels:

Yahoo (YHOO) shows the 61.8% Fibonacci Retracement into $40.50 (a downside breakdown target) while the 38.2% level is just above $45.00 per share.

This is just a more complex way of setting targets to play for or breakout levels to enter new trades.

Do additional analysis on Yahoo to see if a breakout trade would be the right strategy for you and incorporate these levels into your current strategies.

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Corey Rosenbloom, CMT
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1 Comment

One Response to “Yahoo YHOO Building Toward a Triangle Breakout”

  1. Shah Says:

    I really love and enjoy trading on breakouts as that gives me great chance of profits, but at the same time I need to be very careful, if I make one mistake I can end up losing badly, so that’s why I trade with OctaFX broker, it has superb cTrader platform, it helps me in a big way as it’s the latest platform with great setup, so my trades are always done in better style and I never face any delay or re-quotes.