Analysis for NIFTY (30.8.2021)
This is a nifty analysis. And it is showing ASCENDING TRIANGLE PATTER. And it is a BULLISH PATTERN.
HOW ASCENDING TRIANGLE WORKS
An ascending triangle is a chart pattern used in technical analysis. It is created by price moves that allow for a horizontal line to be drawn along the swing highs, and a rising trendline to be drawn along the swing lows. The two lines form a triangle. Traders often watch for breakouts from triangle patterns. The breakout can occur to the upside or downside. Ascending triangles are often called continuation patterns since the price will typically breakout in the same direction as the trend that was in place just prior to the triangle forming. An ascending triangle is generally considered to be a continuation pattern, meaning that the pattern is significant if it occurs within an uptrend or downtrend. Once the breakout from the triangle occurs, traders tend to aggressively buy or sell the asset depending on which direction the price broke out.
Increasing volume helps to confirm the breakout, as it shows rising interest as the price moves out of the pattern.
Volume tends to be stronger during trending periods than during consolidation periods. A triangle is a type of consolidation, and therefore volume tends to contract during an ascending triangle. As mentioned, traders look for volume to increase on a breakout, as this helps confirm the price is likely to keep heading in the breakout direction. If the price breaks out on low volume, that is a warning sign that the breakout lacks strength. This could mean the price will move back into the pattern. This is called a false breakout.
KEY POINTS
1. The trendlines of a triangle need to run along at least two swing highs and two swing lows.
2. Ascending triangles are considered a continuation pattern, as the price will typically breakout of the triangle in the price direction prevailing before the triangle.
3. Although, this won't always occur. A breakout in any direction is noteworthy.
4. A long trade is taken if the price breaks above the top of the pattern.
5. A short trade is taken if the price breaks below the lower trendline.
6. A stop loss is typically placed just outside the pattern on the opposite side from the breakout.
7. A profit target is calculated by taking the height of the triangle, at its thickest point, and adding or subtracting that to/from the breakout point.
HOW ASCENDING TRIANGLE WORKS
An ascending triangle is a chart pattern used in technical analysis. It is created by price moves that allow for a horizontal line to be drawn along the swing highs, and a rising trendline to be drawn along the swing lows. The two lines form a triangle. Traders often watch for breakouts from triangle patterns. The breakout can occur to the upside or downside. Ascending triangles are often called continuation patterns since the price will typically breakout in the same direction as the trend that was in place just prior to the triangle forming. An ascending triangle is generally considered to be a continuation pattern, meaning that the pattern is significant if it occurs within an uptrend or downtrend. Once the breakout from the triangle occurs, traders tend to aggressively buy or sell the asset depending on which direction the price broke out.
Increasing volume helps to confirm the breakout, as it shows rising interest as the price moves out of the pattern.
Volume tends to be stronger during trending periods than during consolidation periods. A triangle is a type of consolidation, and therefore volume tends to contract during an ascending triangle. As mentioned, traders look for volume to increase on a breakout, as this helps confirm the price is likely to keep heading in the breakout direction. If the price breaks out on low volume, that is a warning sign that the breakout lacks strength. This could mean the price will move back into the pattern. This is called a false breakout.
KEY POINTS
1. The trendlines of a triangle need to run along at least two swing highs and two swing lows.
2. Ascending triangles are considered a continuation pattern, as the price will typically breakout of the triangle in the price direction prevailing before the triangle.
3. Although, this won't always occur. A breakout in any direction is noteworthy.
4. A long trade is taken if the price breaks above the top of the pattern.
5. A short trade is taken if the price breaks below the lower trendline.
6. A stop loss is typically placed just outside the pattern on the opposite side from the breakout.
7. A profit target is calculated by taking the height of the triangle, at its thickest point, and adding or subtracting that to/from the breakout point.
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