Most chart patterns are easy to point out in the past, but predicting them as they develop is extremely hard. That’s because certain formations, such as double tops or double bottoms, can turn into triangles or wedge patterns in hindsight.

Since double tops inevitably refer to a top for the stock, if the stock breaks through the double top formation, it ends up not being a double top, but a breakout from a triangle pattern. The Hartford Financial Services Group (HIG​) is at such a inflection point.

As it looks on the chart, this could be a double top pattern:

Then you add just one trend line, and it becomes a possible ascending triangle:

Time will tell which one it is, but right now, the stock is holding above the red trend line on the chart.

When stocks hold trend lines, those are key trading moments. Based on the ascending triangle pattern, and assuming it only started forming at the first top, we can take that price ($57) and subtract the price at the next turning point from it ($51). That gives us a difference of $6. You then add that to the resistance level, at $57, to get a price target of $63.

With the stock around $55 today, that gives us roughly 15% upside potential.

The Bottom Line

If Hartford’s stock can hold above that level, it could eventually break through the top at $57. When it does, that will be a breakout for the stock, and head toward $63 a share. Meanwhile, keep the double top pattern in mind as well. The previous low of $51 is a key level to watch for support if the price breaks below the red trend line.

Want to learn how to invest?

Get a free 10 week email series that will teach you how to start investing.

Delivered twice a week, straight to your inbox.