Select the account you'd like to open


Well Trade Me. A bullish chart pattern.

Well Trade Me. A bullish chart pattern.

Trade Me Group (TME.ASX) is a New Zealand based, but dual listed, online market place and classified advertiser. Its shareholders had a pleasant surprise in the form of a strong price rally in the stock price following release of its results on 20 August. Even after this rally, TME is trading on what looks like a relatively undemanding multiple of around 15 times forecast earnings.

The rally extended for a little over a week after the results were announced but has since drifted in an ever tightening range. This range has established a "pennant" pattern on the chart.

Pennants consist of a near vertical "flagpole" rally followed by a relatively tight symmetrical triangle pattern. They are looked on as potentially bullish, continuation patterns, representing a brief pause in a high momentum rally. The pattern is completed by a clear break above the triangle resistance, provided price hasn't worked too far into the corner of the triangle by the time the break occurs.

In this case, a clear break above the pennant resistance would also set up for a break above the 200 day moving average.

If the pennant doesn't set up and instead, there is a deeper correction, then the 50% and 61.8% retracement levels broadly between about $2.90 and $3.00 might be worth keeping an eye on. Signs that price is bouncing off these retracement levels might indicate the end of the correction.

Trade Me CFD Daily Click to Enlarge Trade Me CFD Daily
Click to Enlarge

Sign up for market update emails