I’ve read a few option books.
THANKS... This is probably the most comprehensive "greeks" article/book I’ve read.

Wonderful blog. …..
A wonder wealth of knowledge there. Thanks so much for your kindness in publishing it!

Thank you very much for the most concise and simplest option intro. Highly recommended.

So far, yours is the best blog/site on basic options notes in the web that I have chanced upon.

Wednesday, November 14, 2007

ASCENDING TRIANGLE PATTERN – Part 1: Formation

Ascending Triangle is a bullish pattern that normally forms in the midst of an uptrend as a continuation / consolidation pattern.
However, sometimes this pattern may also be found at the bottom of a downtrend, signaling a potential reversal of trend.

The Formation of Ascending Triangle



Ascending Triangle has a flat / horizontal upper line and an ascending (upward sloping) lower line, forming a pattern that looks like a flat-top triangle.
In this case, the horizontal upper line acts as resistance, whereas the rising lower line as support.

This pattern occurs because the highs (peaks) are maintaining at about the same price levels, whereas the lows (troughs) are moving progressively higher.
As the range between the peaks and troughs are narrowing, the upper & lower lines converge at the "Apex", which is located at the right of the triangle.

The completion of the pattern occurs when prices break out through the horizontal upper line before finishing the apex of the triangle.

This pattern is usually considered as bullish pattern.
The progressively higher lows that form the ascending lower line indicate increased buying pressures, which give the Ascending Triangle pattern a bullish bias.

The pattern implies that buyers and sellers are in a period where they are still hesitant about where the market is heading. Nevertheless, buyers seem to be more aggressive than sellers, as the lows gradually get higher, while the highs are always holding about the same level. In the end, the buyers find enough conviction to break out to the upside with great force.

Therefore, a triangle pattern may sometimes be associated with a “coil”.
A “coil” needs to recoil (contract) in order to build up enough potential energy for its next expansion.

Continue to Part 2: Important Characteristics of Ascending Triangle pattern.

To read about other chart patterns, go to: Learning Charts Patterns

Related Topics:
* Learning Candlestick Charts
* Options Trading Basic – Part 2
* Understanding Implied Volatility (IV)
* Option Greeks
* Getting Started Trading

4 comments:

Bill Luby said...

Each time I drop in, I am impressed that the blog and the quality of the information continues to improve.

I will be watching closely to see where you take this.

Nice work!

-Bill

P.S. Thanks for including me in your blogroll

OPTIONS TRADING BEGINNER said...

Thanks for the encouragement, Bill! :)

P.S. You're welcome...

Shankar said...

Thank you very much for explaining various concepts related to options..I have a request..I understand it's lot of hard work explaining patterns..could you please provide actual examples from recent stock market data for each pattern?..I have gone through most of your posts explaining patterns, but I am having hard time finding these patterns in actual stock data..recent examples would greatly help me understand how to recognize patterns..
once again thanks and keep up the good work!

Shankar

OPTIONS TRADING BEGINNER said...

Hi Shankar,

Thanks for the suggestion. Appreciate it.

Intended to do so too.
Will try to do it when time permits.

Best Regards,
Options Trading Beginner