ASCENDING TRIANGLE PRICE ACTION
This chart pattern starts forming with bulls already in control of the exchange rate's uptrend. Bears make a stand at a certain rate and try holding it as much as they can, while bulls keep squeezing on that rate till they finally break it and the exchange rate continues its uptrend.
Let's break down the pattern formation!
In an uptrend, price action finds the first resistance (1), which will be the horizontal resistance for the rest of the pattern formation.
Price action reverses direction from the first resistance (1) and goes downwards till it finds the first support (2), which will be the lowest low in the pattern.
Price action reverses direction from the first support (2) and goes upwards, till it finds the second resistance (3), which will be around the rate of the first resistance (1)
Price action reverses direction from the second resistance (3) and goes downwards, till it finds the second support (4), which must be higher than the first support (2)
The pattern is completed when price action reverses direction from the second support (4) and goes upwards till it breaks the triangle's upper border at point (5)
Entry: after breaking the triangle's upper border at point (5), either with an entry after the breakout, or after a possible retest of the upper border.
Take profit: identified by measuring the vertical distance between the triangle's upper border and the first support (2), that measurement is then applied from the breakout rate (5)
Stop loss: can either be the triangle's upper border rate (5), or the last touch to the triangle's lower border before the breakout (4)
This chart pattern starts forming with bulls already in control of the exchange rate's uptrend. Bears make a stand at a certain rate and try holding it as much as they can, while bulls keep squeezing on that rate till they finally break it and the exchange rate continues its uptrend.
Let's break down the pattern formation!
In an uptrend, price action finds the first resistance (1), which will be the horizontal resistance for the rest of the pattern formation.
Price action reverses direction from the first resistance (1) and goes downwards till it finds the first support (2), which will be the lowest low in the pattern.
Price action reverses direction from the first support (2) and goes upwards, till it finds the second resistance (3), which will be around the rate of the first resistance (1)
Price action reverses direction from the second resistance (3) and goes downwards, till it finds the second support (4), which must be higher than the first support (2)
The pattern is completed when price action reverses direction from the second support (4) and goes upwards till it breaks the triangle's upper border at point (5)
Entry: after breaking the triangle's upper border at point (5), either with an entry after the breakout, or after a possible retest of the upper border.
Take profit: identified by measuring the vertical distance between the triangle's upper border and the first support (2), that measurement is then applied from the breakout rate (5)
Stop loss: can either be the triangle's upper border rate (5), or the last touch to the triangle's lower border before the breakout (4)