How the Ascending Triangle Chart Pattern Works

We have explained How the Ascending Triangle Chart Pattern Works. The Ascending triangle is a chart pattern that is used in technical analysis. The ascending triangle is created by price moves which allow it for horizontal lines drawn along the swing heights, and rising trendiness drawn along swing lows.The two lines will form a triangle. So traders watch for breakouts from triangle patterns.

Why Do Ascending Triangles Chart Pattern Form? Hedge funds and other institutions will buy hundreds of thousands of shares in a company. If stock rises it is concluded that there are better opportunities the organization will exit the position. The gets out at stock that is dumped as sellers jump on the bandwagon and push stock down. All the sellers are satisfied, and buyers come in, thinking the stock is a steal at a low price and pushing it higher than it was before.

What are the Attributes?

1) Pattern type :Continuation

2) Indicators :Bullish

3) Measuring :It is the subtract height from the lowest low of pattern and adding it to the breakout level.

4) Volume :Volume will decline through ascending triangle formation, expands when breakout occurs.

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Conclusion

The ascending triangle pattern will represent a higher risk/reward versus other patterns that get narrower. The biggest issue with chart pattern is the potential for a false breakout. It has inherent measuring that is applied at pattern gauge to take profit targets. The traders will measure the distance from the start of the pattern at the lowest point of the rising trend line to flat the support line. The distance is transposed towards the breakout point and end at potential that take profit level. They are also called continuation pattern as price will break in the same direction as trend is in place prior to triangle forming. It is tradable in that it provides a clear entry point, profit target, and stop loss level. The long trade is taken if the price breaks above the top of the pattern. The short trade is taken if the price breaks below the lower trendline.The stop loss is placed outside the pattern on the opposite side from the breakout. The profit target is being calculated by height triangle as the thickest point and adding/subtracting from breakout point. The pattern is significant if it occurs within an uptrend/downtrend. So once the breakout from the triangle occurs, traders will tend to buy/sell the asset depending on which direction the price broke out.


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