When You Learn Technical Analysis, Don't Forget The Ascending Continuation Triangle
One of the more important Classic Patterns in the Learn Technical Analysis Free Series is the Ascending Continuation Triangle. Unlike other Classic Patterns, this one is a little more difficult to spot as it will take its form after two trading-range highs that appear to form a resistance level are joined by a horizontal trendline and two higher lows of the same range are joined by a rising trendline (our site has a visual for this pattern, so please feel free to stop by for a visit).
For investors who want to learn technical analysis, the Ascending Continuation Triangle is an important pattern as it provides us with a Bullish trading signal. Since the pattern is normally a short-term pattern that takes shape over one to three months, investors are able to quickly lock in gains and reverse their position without much loss.
When starting to learn technical analysis, it is usually a little more difficult to have the patience needed to confirm such a pattern. However, here are a few tips to consider as the pattern starts to take shape.
Volume
This is probably the most important confirming factor when it comes to this pattern. As the pattern takes shape, volume should be diminishing. When the pattern is confirmed and there is a breakout, volume should spike. Lacking this volume spike at breakout, investors should no consider the pattern reliable and should steer away from making trade decisions based on it.
Moving Average
When prices are close to or touch the 200-day moving average, the pattern is considered to have greater reliability.
Duration
Duration is also an important consideration. Many people who are just starting to learn technical analysis will forget this. Ideally, the break-out should occur long before the pattern reaches the right tip of the triangle. In fact, investors should expect break-out to occur roughly three-quarters to two-thirds of the way along that upper line.
For investors seeking an explanation as to who this pattern occurs from a fundamental basis, consider a company or large shareholder who wants to sell only at a predetermined price. When the price reaches such levels, the supply of stock will dwindle and push the price down. Until that supply is depleted, this price level will form a resistance line (the upper, horizontal line). However, once this supply is exhausted, the price will break out, which is where people who want to learn technical analysis will see confirmation of such a pattern. - 23222
For investors who want to learn technical analysis, the Ascending Continuation Triangle is an important pattern as it provides us with a Bullish trading signal. Since the pattern is normally a short-term pattern that takes shape over one to three months, investors are able to quickly lock in gains and reverse their position without much loss.
When starting to learn technical analysis, it is usually a little more difficult to have the patience needed to confirm such a pattern. However, here are a few tips to consider as the pattern starts to take shape.
Volume
This is probably the most important confirming factor when it comes to this pattern. As the pattern takes shape, volume should be diminishing. When the pattern is confirmed and there is a breakout, volume should spike. Lacking this volume spike at breakout, investors should no consider the pattern reliable and should steer away from making trade decisions based on it.
Moving Average
When prices are close to or touch the 200-day moving average, the pattern is considered to have greater reliability.
Duration
Duration is also an important consideration. Many people who are just starting to learn technical analysis will forget this. Ideally, the break-out should occur long before the pattern reaches the right tip of the triangle. In fact, investors should expect break-out to occur roughly three-quarters to two-thirds of the way along that upper line.
For investors seeking an explanation as to who this pattern occurs from a fundamental basis, consider a company or large shareholder who wants to sell only at a predetermined price. When the price reaches such levels, the supply of stock will dwindle and push the price down. Until that supply is depleted, this price level will form a resistance line (the upper, horizontal line). However, once this supply is exhausted, the price will break out, which is where people who want to learn technical analysis will see confirmation of such a pattern. - 23222
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posted by X - Men @ 4:25 AM
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