Today’s focus is on the stock of the day, Pinterest, which has been trading in a relatively quiet and uneventful manner recently. However, this period of low activity is setting the stage for what could be a major breakout. The price is currently oscillating around $31, forming a clear pennant pattern—a classic consolidation setup characterized by two narrowing trendlines, marked here in blue.
This pennant formation represents a moment of indecision in the market, as buyers and sellers battle for control. The narrowing range signals that a breakout could be imminent, with the potential to drive the price significantly higher or lower depending on the direction of the breakout.
Most recently, the price tested the upper boundary of the pennant but failed to break through, resulting in a bounce back into the consolidation zone. This rejection underscores the current lack of conviction among buyers to push the price higher. However, the structure of the pennant suggests that this indecision won’t last long.
If the price closes above the upper line of the pennant, it will signal a bullish breakout, providing a clear invitation to buy. Such a move would suggest a strong upward momentum and the possibility of significant gains in the near term. Conversely, if the price closes below the lower boundary, it will indicate a bearish breakout, creating a signal to sell and opening the door to potential downside.