|Head and Shoulder
|Flag and Penant
|Cup And Handle
|Support By Daily Trendline
Ascending Triangle is formed when the stock fluctuates in a band such that upper price range is near its Resistance Basics
and and lower price is moving up (higher bottom) continuously and there by reducing the price gap of highs and lows. From Bulls and bears perspective, bulls are continuous trying to move the price up but are facing strong supply at resistance but bears are failing to bring price down. Therefore, the bottom line is continuously moving up forming lower part of triangle or a trend line and upper resistance forms upper portion of the triangle (upper trend-line).
It takes few weeks to few months for Ascending Triangle pattern to formed, Usually it occurred at an Uptrend and it is a continuation pattern of high reliability. This pattern consist of four parts:
1. Upper Horizontal(flat) trend line: It forms the Resistance and generally have at-least two points, more the better.
2. Lower Ascending(rising) trend line: It forms the Support in the pattern and have atleast two points, more the better.
3. Base: It is the vertical line drawn between Upper Horizontal(flat) trend line and lower Ascending trend line, the point at which the pattern started. The value of base is used to keep the minimum target amount.
4. Apex: It is the point where Upper Horizontal(flat) trend line and Lower Ascending(rising) trend line meets. Some traders used apex as the time in which the minimum targets is achieved.
Spotting & Trading Ascending triangle:
Ascending triangle is highly reliable pattern when it forms during a uptrend and the direction of breakout is in direction of its original trend, therefore it is a continuation pattern. As mentioned in previous section, upper and lower trend-lines should be formed with at least two points each. While reliability of this pattern is high, occasional false breakout is also observed at times. Therefore, strict stop loss is advised.
On further analysis of this pattern, it can be seen as an additional confirmation of a trend-line breakout at resistance. Ascending lower line indicates that bears are fast loosing the battle and there is a strong bias towards upward move. Previous uptrend prior to formation of this pattern, tells general sentiments about the equity and tells a small roadblock in uptrend. Although this itself is quite a reliable pattern, there are occasions of false breakout. Therefore it is important to keep a stop loss when trading with this pattern. Also a supporting technical indicator like Volume, Candlestick Basics pattern etc should provide more confidence in decision making.
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