SIRI 12/4/2013 – Triangle Trouble?
Just a quick chart before bedtime. Sirius XM Holdings (SIRI) continues its downtrend that I have been writing about for the last month, and the symmetrical triangle pattern that is currently developing is typically not a good sign for the short-term.
The next chart is a 3 month daily candlestick chart for SIRI - the symmetrical triangle is identified with the black trend lines.
A symmetrical triangle chart pattern can be classified as either a continuation pattern or a reversal pattern. From a statistical standpoint, I would say that most triangle patterns that develop tend to act as a continuation pattern rather than a reversal pattern.
A continuation pattern means that the trend that was in place prior to the formation of the symmetrical triangle should continue upon breaking out from the symmetrical triangle chart pattern. For SIRI, that would mean that the downtrend that was in place before the symmetrical triangle would continue upon a downside breakout.
If the breakout from the symmetrical triangle is on heavier than normal volume, it helps to confirm the breakout as an actual breakout and not a false breakout. Breakouts can occur to both the upside as well as the downside. Refer to this article to see where the downside risk with SIRI is right now.
Disclosure: I am still long with a handful of shares of SIRI that have a $3.87445 cost basis. I will look to sell these shares in the near term near, just in case a downside breakout occurs from the symmetrical triangle chart pattern.