Many classic technical patterns can simply be put into one category: bases.
These are patterns that show a range in a stock after a trend, accompanied by a decrease in volatility as energy builds for the next move. Generally speaking, the longer the base the more energy has built up.
Qualcomm (QCOM) has been in a basing pattern for nearly four months. The proper name for this pattern would be an “ascending triangle” because the pivot lows have been decreasing and the pivot highs have been at the same level.
How To Trade It
A simple way to play it would be to wait for the breakout above 81 and then buy the Aug 80 calls, with a target of 85 per share. A “trickier” way to play the stock would be to look for the resistance level of 81 to act as a magnet so you can get a better basis on your position. Buying calls on the breakout of 80 and then scaling once the stock hits 81 would be a way to stick around in the position for a little longer with less risk, especially as earnings approaches.
Bottom Line
A breach of the lower trendline would signal that the pattern is broken.
