Welcome to Bravechart. Your in-depth article on chart analysis from a Scotsman stationed in the Outback.
As traders, we use technical analysis as a reliable method for speculating on future price direction of both equities (shares) and indexes. Technical Anyalysis in simple terms is the study of historic price movements in a chart in search of patterns or consistantly traded support and resistance levels. Today we are looking at a specific chart pattern that falls under continuation patterns, the Ascending Triangle.
Appearance: An Ascending Triangle pattern is comprised of:
- An up-trending stock that has higher peaks and troughs.
- A resistance level where the stock is channelling towards.
- Both trend lines create a triangle forming in the top right of your chart.
Important Note: Be aware, this pattern will not be confirmed until the share price breaks through the resistance level and continues the uptrend.
Example: Appen Ltd (APX)
APX has been in a long-term uptrend for the last six months, with the stock recently finding it hard to break through resistance just above $25.62. With the share price reversing from the resistance, the stock has tested the uptrend line – acting as support – and continued to uptrend. The share price has now bounced off this support line recently and is getting close very to the resistance level once again. As the share price is being pushed higher, we will likely see a break out of the share price soon and then a probable continuation of the breakout for the next couple of days. With APX having such a strong run in the last six months, it would not surprise me to see the stock fall slightly and then go sideways for a while.
There are many ways that you could take advantage of these patterns. As a specialist in derivatives, we are able to profit on a stock when it falls as well as when it rises.
If you would like to learn how to pick a stocks direction, then Join us at our live face to face “Technical Analysis, Picking the Direction of a Stock” course.
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