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: Atlas Arteria Group (ALX)
ALX has been in a strong uptrend for a long time now, with the stock consistently finding resistance and breaking through it to move higher. The recent formed back on the 26th March, where the share price formed resistance at $7.37. Since then the share price has bounced off the mid-term uptrend and continued bouncing between resistance and support. The recent test of the resistance level has caused the share price to fall lower, and today’s move has almost tested the supporting uptrend line at $7.24. With the share price now getting squeezed right into the corner of the triangle, we will likely see a breakout soon. The long-term uptrend would likely confirm that the share price will see a further rally but it will have to break the resistance level to be confirmed.
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 face to face one day “Technical Analysis, Picking the Direction of a Stock” course.
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