It's important to see trading volume decreasing as the pattern progresses toward the apex of the triangle. At the breakout point (in this case, $27), there should be a significant increase in volume.

This is a short-term pattern that can take anywhere from one to three months to form. It typically develops during uncertain market times and is reflected in the tightening of the trading range as buyers and sellers act more quickly. When the direction is determined, the stock catapults from the apex in that direction as it breaks free from its tight range.

Descending Continuation Triangle (Bearish)

Another tantalizing bearish pattern is a Descending Continuation Triangle, which also features two converging trendlines. The bottom trendline is horizontal and the top trendline slopes downward.

This pattern illustrates lows occurring at a constant price level, with highs moving constantly lower. It displays two highs touching the upper trendline, and two lows touching the lower trendline.

This pattern is bad for long-side investments, but great for us put buyers.

A note about trading volume with the descending continuation triangle: Typically, volume decreases as the pattern progresses toward the apex of the Triangle and diminishes as the price swings back-and-forth between an increasingly narrow range of highs and lows.

However, when breakout occurs, there should be a noticeable increase in volume. If this volume picture is not clear, investors should be cautious about decisions made based on this pattern. Like the Symmetrical Continuation triangle, this formation takes approximately one to three months to develop.

Unlike the Symmetrical Continuation Triangle, the indecision factor is nonexistent because sellers are more aggressive than buyers. Also unlike the other example, the breakout point is not the apex but instead well-before it. In fact, the closer the breakout is to the apex in this shape, the less-reliable the formation is considered to be.

This has been a rocky time for most investors. But it has been a cork-popping, champagne-guzzling time for members of John Lansing's options trading service, Parabolic Options. Since May 2008 when the service launched, members of Parabolic Options have doubled their money 41 times with profits up to 592%. And there's many more money doublers to come. New trades are ready online now — don't miss out. Click here to join Parabolic Options today!