Public Service Enterprise Group Incorporated (PEG), an energy firm situated in the Northeast, is now trading in the ascending triangle, which is one of my favorite patterns that can be found on the stock market. On because of the uncertainty that exists in the market today, these patterns are rather typical.
A stock will go through phases of consolidation known as triangle patterns, during which investors will place bets on which direction the breakout will take place. But because of the peculiar market conditions that we have seen in the year 2020, there are more investors than ever before who are uncertain about what the future holds. Moreover, because of this, these patterns become an increasingly helpful tool.
There are three essential pieces of information that a triangle pattern provides on a stock: the critical levels that should be monitored, the anticipated movement, and the potential breakout direction. The Public Service Enterprise Group is expected to have a price movement of 35% either to the upside or the negative, according to this trend. Take a look at this:
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Those price projections are established by taking the height of the pattern from the starting point of the two trendlines, which is around $20 per share. Then we may add it or remove it to the possible breakout point to reach our predicted price goals. However, the red resistance line at roughly $55 per share and the rising support line on the chart are the two critical regions to watch.
Trading within the triangle pattern is fraught with a significant amount of danger. We just don't know which way the breakout will occur. A rule of thumb is that they are continuation patterns, however this stock had been climbing for years until collapsing only lately. If we stay with that, we'd anticipate the stock to break out to the negative.
But as you can see on the chart, the level that the stock seems closest to breaking out of is the upside, testing that major resistance level four very strong times. Once this level breaks, it doesn't matter if the price expected to move down — the stock will soar in the direction of the breakout. And that's you want to be prepared to exchange it.
The Bottom Line
Shares of this energy behemoth are set up to explode or collapse by more than 30% in the next weeks. We know the critical levels to watch in Public Service Enterprise Group - we simply have to be patient and play the trend once the breakout happens.