Stock Of The Day: SoFi's Ascending Triangle Pattern — Sign Of A Breakout?

Trading in SoFi Technologies, Inc. SOFI is quiet on Tuesday. But the stock may be on the verge of a breakout.

A classic ascending triangle pattern has formed on the chart. This is a bullish pattern and suggests a move higher, and as such, it is our Stock of the Day.

Many analysts think technical analysis is science fiction. They equate it to astrology or reading tea leaves. They are right when it comes to farcical methods like Gann Theory or Elliot Waves, but they are wrong about other things.

If understood and applied correctly, technical analysis is the study of psychology and supply and demand in a market.

When the market changes from the bulls to the bears, or the bears to the bulls, the price action can manifest as a reversal pattern on a chart. These can be head and shoulder, rounded top or bottom, V top or bottom, or reversal days.

If there is a break or pause in the trend and the price action indicates the trend will soon get going again, a continuation pattern may appear.

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As you can see on the chart, an ascending triangle pattern has formed on the SoFi chart. This is a continuation pattern that suggests the recent uptrend will continue.

There has been resistance for the stock around $14.50. The sellers have held firm at this level. They decided to sell if the buyers came to them and paid their offer price. But if not, they would be patient.

But over the same time horizon, the buyers have become increasingly aggressive. They have been willing to enter the market at higher prices.

Markets typically don't go in straight lines. They form a series of peaks and valleys. When a valley forms at a higher price than at the previous valley, it is called a higher low. This shows that buyers are coming into the market at higher levels.

The ascending triangle pattern is bullish. It is a graphical illustration of aggressive buyers and patient sellers. These dynamics may have set the stage for a move higher in SoFi.

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