Let these charts spark your research into penny stocks

By InvestorPlace Staff | Apr 24, 2013, 5:15 am EDT

Trading penny stocks can be pretty risky, but with that risk comes the chance of huge profits. It’s a lot easier to double your money on a stock that goes from one cent to two, as opposed to hoping that Apple (NASDAQ:AAPL ) will rocket back up to its highs, or even playing options.

The Recognia Pattern Scan is showing several technical patterns in penny stocks that should give you some trading ideas on the long side. If the trends are confirmed, these patterns are predicted to play out over the intermediate term (next six weeks to nine months). Remember—penny stocks are speculative investments, and can move unpredictably.

Click to Enlarge Bullish Continuation Wedge

Bullfrog Gold Corp. (OTC:BFGC ) has developed a bullish continuation wedge pattern over the past 46 days.

After a temporary interruption, the prior uptrend is set to continue. A continuation wedge represents a temporary interruption to an uptrend, taking the shape of two converging trendlines both slanted downward against the trend. During this time the bears attempt to win over the bulls, but in the end the bulls triumph as the break above the upper trendline signals a continuation of the prior uptrend.

Over the weeks or months that this pattern forms the trend appears downward but the long-term range is still upward.

Volume should diminish as the pattern forms.

Yesterday’s close. $0.27

Long target price. $0.51 $0.57

Click to Enlarge Bullish Continuation Diamond

Copytele (NYSEAMEX:COPY ) has developed a bullish continuation diamond over the past 44 days.

The price has broken upward out of a consolidation period, suggesting a continuation of the prior uptrend. The pattern begins during a downtrend as prices create higher highs and lower lows in a broadening pattern. Then the trading range gradually narrows after the highs peak and the lows start trending upward. When the price breaks upward out of the diamond’s boundary lines, it marks the resumption of the prior uptrend.

Yesterday’s close. $0.20

Long target price. $0.28 $0.30

Click to Enlarge Bullish Continuation Wedge

General Employment Enterprises (NYSEAMEX:JOB ) has developed a bullish continuation wedge over the past 18 days.

A bullish continuation wedge consists of two converging trend lines. The trend lines are slanted downward. Unlike triangles where the apex is pointed to the right, the apex of this pattern is slanted downwards at an angle. This is because prices edge steadily lower in a converging pattern i.e. there are lower highs and lower lows. A bullish signal occurs when prices break above the upper trendline.

Over the weeks or months that this pattern forms the trend appears downward but the long-term range is still upward. Volume should diminish as the pattern forms.

Yesterday’s close: $0.29

Price target: $0.41 $0.43

Click to Enlarge Head and Shoulders Bottom

Intellicheck Mobilisa (NYSEAMEX:IDN ) has developed a head and shoulders bottom over the past 22 days.

The price seems to have reached the end of a period of accumulation at the bottom of a major downtrend; the break up through resistance signals a reversal to a new uptrend. The head and shoulders bottom is created by three successive declines in the price following a significant downtrend. The lowest low (head) is in the middle, flanked by two higher lows (shoulders) at roughly the same level. Volume is highest as the price makes the first two declines, then diminishes through the right shoulder. Finally volume surges as the price closes above the neckline (drawn between the two highs) to confirm the reversal.

Yesterday’s close: $0.45

Price target. $0.54 $0.56