Pattern is a continuation pattern that means when it plays out it will continue the preceding trend. It is created by price moves that allow for an upper horizontal line to be drawn along the swing highs, and a lower rising trendline to be drawn along the swing lows. These two lines form an . Traders here usually watch for breakouts from upper resistance in patterns.
How does the Pattern work?
After the prior uptrend when investors try to book profits it creates a resistance that leads to a high . But due to the prior uptrend investors are still interested in the asset which leads to picking up in demand slowly, resulting in a rising trendline. Time in this phase is also a crucial element. The longer this pattern consolidates, the more chances it has to give a possible breakout to continue the uptrend.
Why is the Pattern Unique?
patterns usually have a higher breakout success rate than symmetrical triangle patterns. In an , higher lows are constantly being built, which shows there is a strong demand for the asset.
Role of Volume:
plays a major role in the completion of all major patterns. The horizontal trendline which acts as resistance can give spikes in . We will call it a breakout when a candle closes above horizontal with a great spike or rise in average .
Above Chart Explanation:
This is the 4H chart of FTTUSDT with a clear preceding upward trend. After the uptrend, we enter the second phase where the upper horizontal line becomes resistance 4 times in a row and the lower rising trendline becomes support 3 times in a row. As we have observed here FTTUSDT consolidated for nearly 1 month in an pattern, which finally led to a super breakout.
Two Possible Entries:
Entry 1: On rising support, when the price touches the rising support trendline and if there is rising average , it makes a good entry with a stop loss placed below the previous higher low point.
Entry 2: On resistance breakout, we should wait for the 4H candle to close above the resistance to confirm the breakout’s validity. Once the breakout is valid, a potential opportunity would be to enter at the close of the 4H candle with a stop loss placed a little below the breakout level. Usually, we should target the height of the triangle after the breakout.
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This is just an educational post. Never trade just any pattern. And please do your research before making any trades.
PS we are posting this again for our Indian Audience.