Showing posts with label Technical Analysis. Show all posts
Showing posts with label Technical Analysis. Show all posts

Wednesday, July 3, 2019

Ascending Triangle Definition and Tactics

An ascending triangle can reveal a lot about current market sentiments and how well an asset is going to perform in the coming period. It’s a great tool to use when you need to spot the right breakout from a certain pattern. Traders can highlight them in advance and take advantage of the right moment to invest.

When it comes to how best you can use ascending triangles, they can be leveraged across one-minute charts, five-minute charts and longer time periods. They’re dynamic and flexible at the same time, while allowing traders to incorporate real time data into their mix.

Regardless of whether you’re day-trading or scalping, the ascending triangle can be used successfully to perform a wide array of trades. The triangle takes advantage of supply and demand balances to get the right valuation at the right time.

Understanding the formation

The ascending triangle is basically a continuation pattern that can be drawn across critical data points. It is a bullish triangle that eventually leads to a breakout opportunity. When the opportunity can be tracked in advance, it opens up avenues for traders to make a profit. It’s the perfect bullish pattern that can uncover potential trades in the future.

It is also the opposite of a descending triangle, which is commonly termed as the bear pattern or bear projection. Essentially, the ascending triangle has three key elements, which are –

Upward trend line – This is the connecting of the lows as a rising trend line across a time-based parameter. The bullish pattern can be joined through this line and aligned against the second component.

A flat resistance level – The resistance level is a flat line, that isn’t allowing the value of a certain asset to go ahead of a peak price point. The market has tried several times to break through this line, but the balance of price power shifts back.

Connecting line – After charting both the lines, the connecting line forms the third base of the triangle. This helps complete the ascending triangle, showing the complete picture to the savvy investor.

Remember – The trendline of the ascending triangle needs to run through at least two swing highs and lows. This can help with the initial setup of the ascending triangle formation.

Key tactics when using ascending triangles

It’s not just about finding the perfect time to buy or sell a certain asset class. It’s also about taking advantage of the area inside the triangle as well. This is important to note as it can help you find multiple opportunities instead of just the one. If the triangle is touching across points in the future, then it can be a good predictor of perceived value by the market.

Sellers may be interested in staying put at a certain point, because of an announcement made by a certain analyst. Buyers may also want to get more aggressive as the trend seeps downwards inside the triangle charted.

Ascending triangles can also be formed when you want to make a profit in the short term. Automated software packages can detect when an ascending triangle is being formed for you to take maximum advantage. Additionally, traders can make a calculated forwards move if they are going to expect the price of a certain asset to reach a certain point within the triangle.

Another important tactic to be mindful of is to chart the right data. This takes a bit of judgment and experience, but the right dataset can help you get better results when working with massively fluctuating points. An ascending triangle can be followed by a descending one, and vice-versa. Traders that can take advantage of both, emerge more profitable in the long run.

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