Start With The Ascending Continuation Triangle When You Learn Technical Analysis
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.
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 by far way more important than any other fact. As the price swings back and forth during its rallies, volume should diminish. When the pattern is confirmed, volume should spike (or be above the average while the pattern took shape). Alternately, if there is no spike at breakout, then it is more likely that this pattern is less reliable.
200-day 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.
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. - 23211
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 by far way more important than any other fact. As the price swings back and forth during its rallies, volume should diminish. When the pattern is confirmed, volume should spike (or be above the average while the pattern took shape). Alternately, if there is no spike at breakout, then it is more likely that this pattern is less reliable.
200-day 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.
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. - 23211
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posted by X - Men @ 5:31 AM
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