When You Learn Technical Analysis, Don't Forget The Ascending Continuation Triangle
While another Classic Pattern has already been discussed in our Learn Technical Analysis Free series, we should also be introduced to the Ascending Continuation Triangle pattern rather early. This Classic Pattern will take shape when two high levels of a trading range are connected by a horizontal line (indicating a resistance level) and a rising line that are joined by two higher lows of that same range (please visit the site for a visual).
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.
For investors who are just starting to learn technical analysis, remaining patient as the pattern takes shape is often more difficult than spotting the pattern itself. To confirm the pattern, here are a few things one should look for.
Volume
This is considered one of the most important factors when confirming this pattern. What investors need to see is that volume diminishes as the pattern takes shape and then spikes at breakout (pattern confirmation). Conversely, if there is no spike at breakout, then the pattern is considered less reliable or even false.
Moving Average
If the pattern's prices come close to or touch the 200-day Moving Average, the pattern is stronger and investors should consider it more reliable than if the prices were not close.
Duration
Duration also needs to considered, something many investors who have just started to learn technical analysis tend to forget. Break-out will happen when the price penetrates the upper horizontal line (e.g. the resistance line), but this occurrence should happen long before the pattern reaches the apex, or right-side tip of the triangle. Generally speaking, this break-out should occur between three-quarters to two-thirds of the way along upper line.
In terms of explaining, in fundamental terms, how the Ascending Continuation Pattern evolves, consider a large institutional investor who wants to unload a large quantity of stock at a certain price. The order is placed. Once that price is reached, buyers will draw on the large supply and consequently, for other sellers to fill their orders, the price will need to drop. This will create a resistance line. However, once that large supply of stock is exhausted, the price will continue to climb as it normally would, providing the breakout that investors who want to learn technical analysis are waiting to see. - 23196
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.
For investors who are just starting to learn technical analysis, remaining patient as the pattern takes shape is often more difficult than spotting the pattern itself. To confirm the pattern, here are a few things one should look for.
Volume
This is considered one of the most important factors when confirming this pattern. What investors need to see is that volume diminishes as the pattern takes shape and then spikes at breakout (pattern confirmation). Conversely, if there is no spike at breakout, then the pattern is considered less reliable or even false.
Moving Average
If the pattern's prices come close to or touch the 200-day Moving Average, the pattern is stronger and investors should consider it more reliable than if the prices were not close.
Duration
Duration also needs to considered, something many investors who have just started to learn technical analysis tend to forget. Break-out will happen when the price penetrates the upper horizontal line (e.g. the resistance line), but this occurrence should happen long before the pattern reaches the apex, or right-side tip of the triangle. Generally speaking, this break-out should occur between three-quarters to two-thirds of the way along upper line.
In terms of explaining, in fundamental terms, how the Ascending Continuation Pattern evolves, consider a large institutional investor who wants to unload a large quantity of stock at a certain price. The order is placed. Once that price is reached, buyers will draw on the large supply and consequently, for other sellers to fill their orders, the price will need to drop. This will create a resistance line. However, once that large supply of stock is exhausted, the price will continue to climb as it normally would, providing the breakout that investors who want to learn technical analysis are waiting to see. - 23196
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posted by X - Men @ 1:45 AM
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