This Stock Trading System involves using Technical analysis to predict future movements of the stock price. The stock market trading system involves three main elements,(1) the 10 day moving average("dma"), (2) the 50 day moving average and (3) the stock price relative to the 10 dma.
In the charts below, note that the 10 dma is shown as the blue line below and represents the sides of the triangle, the 50 dma is the red line and forms the base of the triangle. An inverted triangle is defined as the point formed by the 10 dma pointing downward.
Note the triangle or inverted triangle formed by two sides made of the 10 dma (blue lines) and the base of the triangle formed by the 50 dma (red line).
Pattern: inverted triangle and stock price above 10 dma, bullish
Pattern: triangle and stock price below 10 dma, bearish
Noteworthy: 10 dma is a moving target, ie can change
In March of 2007 IBM stock pattern dipped below the 50 dma and the 10 dma then rose above the 10 dma form an inverted triangle. The stock price had one last direction reversal before a breakout gap .
In 2006, IBM stock price fell from May to July forming a long leg of an inverted triangle, before changing trend and crossing above the 10 dma and 50 dma in August 2006.
IBM stock movements in 2005 shows how the stock trading system would have resulted in prediction of direction of stock price movements.
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