China Shipping Container Lines (2286) – sell set up

This chart caught my attention today as a potential example of a classic continuation triangle.

Set Up

China Shipping CFD – Daily. Source: CMC Tracker

While triangles can often be traded in either direction (depending on whether they break the triangle support or resistance), my bias towards favouring this as a sell set up is based on the following factors

  • Having so far corrected only 38.2% of the last major rally, the chances are this retracement has further to go
  • The steep decline into this pattern has that “flagpole” look often associated with the classic pennant which is a continuation pattern 
  • The fast stochastics on the Weekly Chart are now trending down having recently dropped out of the overbought zone above 80.

China Shipping Lines CFD Weekly. Source: CMC Tracker

Strategy

A typical approach to strategy with a set up like this would be:

  • Sell on a break of the triangle support after allowing a price filter to reduce the risk of a false break
  • Place the inititial stop behind the triangle resistance line
  • Use the Fibonacci cluster level shown on the chart below as a profit objective. This consists of the 61.8% retracement level and a projection that the next swing down will be the same size as the first swing down to the triangle

China Shipping CFD – Daily. Source CMC Tracker

About Ric Spooner

Over 30 years market experience - professional trader, broker, director
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