Ascending Triangle Formation
Ascending triangle formation is a bullish triangle chart formation. It can be a trend continuation formation when formed in an uptrend or trend reversal pattern when formed in a downtrend; the former is more reliable and common. Ascending triangle is an easy-to-identify pattern formed of two trend lines, an upper flat horizontal trendline and a lower rising trendline.
The upper horizontal trendline connects highs for a period; it is flat because the bulls repeatedly fail to break a major resistance level and the price bounce back on touching that level. The lower trendline connects lows for a period; it is rising because each time the bulls have managed to create lows higher than previous one. The trading volume also seems to decrease with pattern formation. At one point of time breakout occurs and the price moves sharply upwards. Usually there is a noticeable increase in volume at breakout.
Ascending triangle is considered as a more reliable formation when they are formed in an uptrend. Buy signals are generated once the price breakout the resistance level. The usually price target is equal to the vertical triangle height (highest distance between a high and low) over the original resistance level (which is now the immediate support level). The duration of the ascending triangle formation can be from weeks to 2 or 3 months. Traders should also use other tools to confirm trend breakouts before placing their orders.
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The upper horizontal trendline connects highs for a period; it is flat because the bulls repeatedly fail to break a major resistance level and the price bounce back on touching that level. The lower trendline connects lows for a period; it is rising because each time the bulls have managed to create lows higher than previous one. The trading volume also seems to decrease with pattern formation. At one point of time breakout occurs and the price moves sharply upwards. Usually there is a noticeable increase in volume at breakout.Ascending triangle is considered as a more reliable formation when they are formed in an uptrend. Buy signals are generated once the price breakout the resistance level. The usually price target is equal to the vertical triangle height (highest distance between a high and low) over the original resistance level (which is now the immediate support level). The duration of the ascending triangle formation can be from weeks to 2 or 3 months. Traders should also use other tools to confirm trend breakouts before placing their orders.
NobleTrading.com Offers Online Stock Trading, Online Options Trading
Online Futures Trading, Online Forex Trading
Worldwide Brokerage Service, Day Trading Brokerage
posted by NobleTrading at
7:35 AM
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