Triangle (CHNR)

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Thanks to Clarke for a heads-up on CHNR's consolidation pattern. The chart at the top is a weekly chart of CHNR that shows two massive breakouts following long term consolidation triangles. The first such triangle took 2.5 years to form, but the wait was worthwhile. CHNR shot up about 450% when it finally did break out. The second such triangle "only" took about 1.5 years to form. Again, it was worth the wait, as the stock rallied about 400% on the eventual breakout. The chart in the middle shows CHNR's current triangle. It's an infant at only 6 months in the making. The tops of these triangles are nearly impossible to draw accurately. It may be the case that CHNR takes another 6 months to a year to consolidate, which is why we've drawn more than one resistance line. Only time will give clarity to where the line should be drawn.

Here's how to play it: set an alarm to sound when CHNR breaks $26, and another when it breaks $28, and another when it breaks $29 and $30. At some point, there will be a day when volume explodes to several times its average daily volume, and your alarm will sound. When that happens, you've got a good risk/reward ratio for a longside trade. If you are serious about trying to capture this stock's next move, we suggest that you look back at daily charts of its previous breakouts to see that the breakout doesn't necessarily happen all in a single day.

The chart at the bottom is actually a chart of GOOG. After over 1.5 years in a similar triangular consolidation pattern, GOOG broke out in September 2007. After being hit 7 times, there were few investors in GOOG that were not aware of this line. We just bring this to your attention to show that these long term triangular consolidation patterns form in all kinds of stocks, from low volume, less popular stocks to the most visible of them all.