To review Arcelor's stock, please take a look at the 1-year chart of MT (ArcelorMittal) below with my added notations:
As you can see from the chart, MT has been trading within a narrow, sideways Rectangle for the last (4) months. Rectangle patterns form when a stock gets stuck bouncing between a horizontal support and resistance. A minimum of (2) successful tests of the support and (2) successful tests of the resistance will give you the pattern. What's great about a Rectangle pattern is that it not only provides you with trading points of support & resistance, but it also gives clearly defined breakout & breakdown points. For MT, the Rectangle pattern formed a $16 resistance (red) and a $14 support (navy).
Chart patterns can also provide price targets. Simply take the height of the overall pattern and add or subtract that amount to or from the breakout or breakdown point to get the minimum price objective. For example, since the Rectangle pattern for MT is $2 high ($16 - $14), MT should climb to a minimum of $18 ($16 + $2) if it breaks above $16 or fall to $12 ($14 - $2) if the stock breaks below the $14 level. Chart pattern price targets are certainly not guarantees, but they are often fulfilled.
The Tale of the Tape: MT has formed a very common chart pattern know as a Rectangle. The possible long positions on MT would be either on a pullback to $14, or on a breakout above $16. The short opportunities would be at either $16 or on a breakdown below $14.
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