JPMorgan Chase & Co. (NYSE:JPM) has been in a trading range for over a year known as a triangle pattern. I call it a heaven or hel! pattern setup because the move upon breaking the triangle can be huge!

What Does The Triangle Mean?

It means JPM is going to break one way or the other in the next few weeks. This is simply because the triangle lines will come together and the stock will be forced to move outside the lines. Essentially it will squeeze the stock until it pops out one way or another.

How Do You Play It?

The first thing to do is patiently wait until the stock either breaks out towards heaven or breaks down to hel!. The send the daily chart closes above or below the line make the trade. Obviously, if it closes above the breakout line (down-sloping trend line) buy JPM. If the stock closes below the breakdown trend line (up-sloping trend line) short it.

Where To Exit The Trade?

On a breakout, the likely upside target would be the high of the triangle. This would be a target of $70.00 near term. If JPM breaks down, the downside target would be the low of the triangle at $50.00.

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Jenny Rebekka