Take a look at the 1-year chart of Sealy (NYSE: TPX) with the added notations:
TPX appears to have formed the double top price pattern (red) over the last 4 months. Double tops are reversal patterns and are as simple as they sound: Rallying up to a point (T), selling off to a support, and then rallying back up again to approximately the same top (T).
As with any price pattern, a confirmation of the pattern is needed. TPX would confirm its pattern by breaking the $54 support (green) that was created by the double top pattern.
The Tale of the Tape: TPX has formed a potential double top. A short trade could be made on a break of the $54 level. Since there is no guarantee of a breakdown, a long trade could be made at $54 if a trader is willing to disregard the pattern.
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