Ascending triangle has a series of higher lows that are pulled up to the resistance line. This indicates the power of buyers for three reasons:
1. Buyers are willing to buy at higher prices.
2. There is no selling pressure.
3. Stop orders to buy are collected above the resistance level.
If buyers do not buy at higher prices, you will not see higher lows pulling up to the resistance line. The fact that the market can form a series of higher lows suggests that there is demand even as the price rises. If the sellers took control of the situation, the price would not stay near the resistance level for such a long time. Instead, there would be a strong rebound of the price from the level. If the price continues to hold near resistance, then there are no sellers in the market. As the price gets closer to the resistance level, there are new traders who begin to open short positions from the level. But what happens if the market breaks the level? Their stop orders will work, and this will further push the price to move higher after the breakout.
1. Buyers are willing to buy at higher prices.
2. There is no selling pressure.
3. Stop orders to buy are collected above the resistance level.
If buyers do not buy at higher prices, you will not see higher lows pulling up to the resistance line. The fact that the market can form a series of higher lows suggests that there is demand even as the price rises. If the sellers took control of the situation, the price would not stay near the resistance level for such a long time. Instead, there would be a strong rebound of the price from the level. If the price continues to hold near resistance, then there are no sellers in the market. As the price gets closer to the resistance level, there are new traders who begin to open short positions from the level. But what happens if the market breaks the level? Their stop orders will work, and this will further push the price to move higher after the breakout.
