The share price of Mondi Ltd has consolidated into a triangle shaped pattern (blue triangle). These types of consolidations are generally considered continuation patterns as they have a habit of forming before the trend which preceded the pattern is renewed. It is however prudent to wait for a breakout to occur before pre-empting the breakout direction.
The red triangles on the chart show recent occurrences of the pattern before an uptrend on Mondi Ltd was renewed. Bollinger bands have been added to the chart as they are commonly used as a filter for these types of breakout scenarios. Breakout traders might consider a close outside of the Bollinger band accompanied by a sharp widening of the distance between the upper and lower band for confirmation of the breakout.
The blue arrows and red circles on the chart illustrate previous occurrences of these Bollinger breakouts. An upside breakout is considered should the price manage to close above resistance at 31100. The height of the pattern predicts a proportionate directional move in the region of 4300c when the breakout finally occurs.
A downside breakout is considered with a price close below 28500, although should this scenario manifest, trend followers might prefer to wait for weakness to play out rather than trade against the long term uptrend.
Click here to view the Mondi chart