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--- chart_analysis:chart_patterns:ascending_triangle_continuation [2023/07/04 20:04]
jayanthi [What Is an Ascending Triangle Pattern?]
+++ chart_analysis:chart_patterns:ascending_triangle_continuation [2023/07/04 20:15]
jayanthi [What is the best time frame for a triangle pattern?]
@@ Line 18: / Line 18: @@
 ===== Is an Ascending Triangle Bullish? =====
+In contrast to the [[:glossary_s#symmetrical_triangle|symmetrical triangle]], an ascending triangle has a definitive **bullish** bias before the actual breakout. If you will recall, the symmetrical triangle is a neutral formation that relies on the impending breakout to dictate the direction of the next move.
-In contrast to the [[:glossary_s#symmetrical_triangle|symmetrical triangle]], an ascending triangle has a definitive **bullish** bias before the actual breakout. If you will recall, the symmetrical triangle is a neutral formation that relies on the impending breakout to dictate the direction of the next move. On the ascending triangle, the horizontal line represents overhead supply that prevents the security from moving past a certain level. It is as if a large sell order has been placed at this level and it is taking a number of weeks or months to execute, thus preventing the price from rising further. Even though the price cannot rise past this level, the reaction lows continue to rise. It is these higher lows that indicate increased buying pressure and give the ascending triangle its **bullish bias**.
+On the ascending triangle, the horizontal line represents overhead supply that prevents the security from moving past a certain level. It's as if a large sell order has been placed at this level, and it's taking several weeks or months to execute, thus preventing the price from rising further. Even though the price cannot rise past this level, the reaction lows continue to rise. It's these higher lows that indicate increased buying pressure and give the ascending triangle its **bullish bias**.
 {{:chart_analysis:chart_patterns:ascending_triangle_continuation:asctri-conti-prtl.png|Primus Telecommunications Group, Inc. Ascending Triangle example chart from StockCharts.com}}
-Primus Telecom (PRTL) formed an ascending triangle over a 6-month period before breaking resistance with an expansion of volume.
+Primus Telecom (PRTL) formed an ascending triangle over six-months before breaking resistance with an expansion of volume.
   * From a low of 8.88 in April, the stock established an uptrend by forming a higher low at 8.94 and advancing to a new reaction high in early June. (The beginning of the trend is not included on this chart.) After recording its highest price in 10 months, the stock met resistance at 24.\\ \\
-   * In June, the stock hit resistance at 23 a number of times and then again at 24 in July. The stock bounced off 24 at least three times in 5 months to form the horizontal resistance line. It was as if portions of a large block were being sold each time the stock neared 24.\\ \\
+   * In June, the stock hit resistance at 23 several times and then again at 24 in July. The stock bounced off 24 at least three times in 5 months to form the horizontal resistance line. It was as if portions of a large block were being sold each time the stock neared 24.\\ \\
-  * The reaction lows were progressively higher, and formed an ascending trend line. The first low, in May 1999, occurred with a large spike down to 12.25, but the trend line was drawn to connect the prices grouped around 14. The ascending trend line could have been drawn to start at 12.25 and this version is shown with the gray trend line. **//The important thing is that there are at least two distinct reaction lows that are consecutively higher//**.\\ \\
+  * The reaction lows were progressively higher and formed an ascending trend line. The first low, in May 1999, occurred with a large spike down to 12.25, but the trend line was drawn to connect the prices grouped around 14. The ascending trend line could have been drawn to start at 12.25, and this version is shown with the gray trend line. **//The important thing is that there are at least two distinct reaction lows that are consecutively higher//**.\\ \\
-  * The duration of the pattern is around 6 months, which may seem a bit long. However, all the key ingredients for a robust pattern were in place.\\ \\
+  * The duration of the pattern is around six months, which may seem a bit long. However, all the key ingredients for a robust pattern were in place.\\ \\
-  * Volume declined from late June until early October. There was a huge expansion when the stock fell from 23.44 (point 6) to 19.38 on two heavy trading days in October. However, this was only for two days and the stock found support around 20 to form a higher low. In keeping with the ideal pattern, the next expansion of volume occurred in early November when the stock broke resistance at 24. The stock traded at above average volume 7 of the 10 days surrounding the breakout, and all 7 were up days. [[:glossary_c#chaikin_money_flow_cmf|Chaikin Money Flow]] dragged a bit from the two heavy down days, but recovered to +20% five days after the breakout.\\ \\
+  * Volume declined from late June until early October. There was a huge expansion when the stock fell from 23.44 (point 6) to 19.38 on two heavy trading days in October. However, this was only for two days, and the stock found support around 20 to form a higher low. In keeping with the ideal pattern, the next expansion of volume occurred in early November when the stock broke resistance at 24. The stock traded at above average volume 7 of the 10 days surrounding the breakout, and all 7 were up days. [[:glossary_c#chaikin_money_flow_cmf|Chaikin Money Flow]] dragged a bit from the two heavy down days, but recovered to +20% five days after the breakout.\\ \\
   * The stock advanced to 30.75 before pulling back to around 26. Support was found above the original resistance breakout, and this indicated underlying strength in the stock.\\ \\
   * The initial advance was projected to be 10 (24 -14 = 10) points from the breakout at 24, making a target of 34. This target was reached within 2 months, but the stock didn't slow down until reaching 50 in March (not shown). Targets are only meant to be used as guidelines, and other aspects of technical analysis should also be employed for deciding when to sell.\\ \\
+===== Ascending Triangle FAQs =====
+==== What's the best time frame for a triangle pattern? ====
+Triangle patterns, including ascending, descending, and symmetrical, can be used in various time frames. For day or short-term trading, use shorter time frames like one-minute to hourly charts. For medium-term trading, four-hour to daily charts are suitable. For long-term trading or investing, use weekly or monthly charts. The larger the time frame, the more significant the pattern typically is.
+==== How do you calculate the target price following a breakout from an ascending triangle pattern? =====
+Once the breakout from the ascending triangle has occurred, the price projection or target is found by measuring the widest distance of the pattern and applying it to the resistance breakout. This gives an estimated target price for the asset following the breakout. However, this target is just a guideline, and other technical analysis tools should also be employed when deciding when to sell.
+==== How accurate are ascending triangle patterns? ===
+Ascending triangle patterns are generally reliable indicators of a bullish trend, especially when formed in an ongoing uptrend and confirmed with high trading volume. However, like all trading patterns, they're not foolproof and should be used alongside other technical analysis tools for best results.