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).
The importance of the Ascending Continuation Triangle as it relates to investors who want to learn technical analysis is that it is a bullish signal. Typically, it is a short-term pattern that forms between one and three months. This allows for quick gains and also for lesser losses if the pattern was false.
Investors who have just begun to learn technical analysis will actually find it more difficult to remain patient as they confirm the pattern than it is to spot the pattern. For confirmation, investors should look for the following.
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.
200-day 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
For people who are just starting to learn technical analysis, keep in mind that the break-out (penetration of the upper, horizontal line) should happen well before the pattern actually reaches the apex of the triangle (the right-most tip). In fact, break-out should occur roughly three-quarters to two-thirds of the way along the 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. - 23223
The importance of the Ascending Continuation Triangle as it relates to investors who want to learn technical analysis is that it is a bullish signal. Typically, it is a short-term pattern that forms between one and three months. This allows for quick gains and also for lesser losses if the pattern was false.
Investors who have just begun to learn technical analysis will actually find it more difficult to remain patient as they confirm the pattern than it is to spot the pattern. For confirmation, investors should look for the following.
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.
200-day 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
For people who are just starting to learn technical analysis, keep in mind that the break-out (penetration of the upper, horizontal line) should happen well before the pattern actually reaches the apex of the triangle (the right-most tip). In fact, break-out should occur roughly three-quarters to two-thirds of the way along the 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. - 23223
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posted by X - Men @ 4:25 AM
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