THE TREND IS YOUR FRIEND!!
Chart patterns are geometric shapes found in the price data that can help a trader understand the price action, as well make predictions about where the price is likely to go.
Not knowing what chart patterns are forming can be costly because you are completely unaware of what is forming on the charts and the patterns the chart is signaling.
The ascending triangle is a continuation of an existing uptrend. The formation in this example is a horizontal resistance level at the top and support levels that are rising at the bottom part of the triangle.
What does this mean then? Well, if you see this pattern in an uptrend, expect a breakout to the upside.
1. Price trend moving up or down and converging to a single point
2. A horizontal resistance level forming at the top and a rising support level forming at the bottom.
Look at the following example:
How to trade the ascending triangle:
Watch ascending triangle form and wait for the breakout to happen. If a candlestick has broken the horizontal resistance level start to build a position as the price is breaking out and use a chart stop loss at or below the horizontal resistance level in case of a false breakout, thereby minimizing loss. Maximize returns consider profit taking level before putting on position in order to understand the risk / reward of the trade.
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