Noah Holdings -- Diamond Bottom -- 6 to 20 week Breakout

10 мая 2016 г.

NOAH forms “Diamond Bottom” pattern

Description

Bottom Triangles and Bottom Wedges make up a group of patterns which have the same general shape as Symmetrical Triangles, Wedges, Ascending Triangles and Descending Triangles. The difference is that these particular formations are reversal and not continuation patterns. These patterns have two converging trendlines. The pattern will display two highs touching the upper trendline and two lows touching the lower trendline. Contrary to Triangle formations, Wedges are characterized by their boundary trendlines both moving in the same direction.

Volume is an important factor to consider. 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 the breakout occurs, there should be a noticeable increase in volume. If this volume picture is not clear, investors should be cautious about decisions based on the particular Triangle or Wedge pattern.

This pattern is confirmed when the price breaks upward out of the Bottom Triangle or Bottom Wedge formation to close above the upper trendline.

Important Characteristics

Following are important characteristics for this pattern.

Occurrence of a Breakout

Technical analysts pay close attention to how long the pattern takes to develop to its apex. The general rule is that prices should break out - clearly penetrate the upper trendline - somewhere between three-quarters and two-thirds of the horizontal width of the formation. The break out, in other words, should occur well before the pattern reaches the apex of the Triangle or Wedge. The closer the breakout occurs to the apex the less reliable the formation.

Duration of the Triangle or Wedge

This pattern is a relatively short-term. While long-term Bottom Triangles and Bottom Wedges do form, the most reliable patterns take between one and three months to form.

Volume

Investors should see volume decreasing as the pattern progresses toward the apex of the triangular or wedge shaped pattern. At breakout, however, there should be a noticeable increase in volume.

Optionable Stock


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• The stock's price has broken upward to confirm a classic chart pattern, offering a target price for the intermediate-term in the range of 31.25 to 32.50.
  

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  Earnings Per Share (EPS) was up 16% compared to the same quarter in the prior year, and has grown an average of 21% annually over the past 5 years. This tells us the company increased earnings and/or decreased the number of shares.
  

• Return on Equity (ROE) is 26% for the latest twelve months. This reflects how efficient the company has been at turning a profit on the money shareholders have invested.
  

• With a market cap of 1.47B, this is considered a small cap stock which offers the potential for above average returns, though in exchange for greater risk and volatility.
  

Support found at: $24.20
Resistance found at: $25.18