Ascending Triangle Breakout seen in BHEL | Target 104+Hi guy's, i hope you all will be good,
i have brought an another stock which has given a Ascending Triangle Pattern Breakout on chart. This idea definitely is going to a learning content as i am gonna to explain in very brief about Ascending Triangle Pattern. So let's start,
What is Ascending Triangle Pattern?
An Ascending Triangle is a Classical Chart pattern that is used in Technical Analysis to indicate a continuation of a trend. It is created by a horizontal resistance line that is drawn along the swing highs, and a rising up trendline that is drawn along the swing lows as shown in the Chart Above.
The breakout in an ascending triangle 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.
A trader enters the trade on the long side, if the horizontal line is broken out on the upside. The stop-loss in this case would be the lower trendline. The target would be the widest part of the triangle.
If a breakout happens on the downside of the ascending trendline, a short entry can be taken and a stop-loss can be put above the horizontal line. Again the target would be the widest part of the ascending triangle.
Like any support/resistance or trendline breakout/breakdown, volume plays a very important part in confirming the strength of an ascending triangle breakout/breakdown. The volume should be low and below average as the ascending triangle is nearing completion and when the breakout or breakdown happens, the volume should be high, indicating that big money is participating in the move.
An ascending triangle can be high reward to risk trade as the stop-loss is small (because of the narrow width of the triangle at the time of completion), but it is also prone to false breakouts, hence one can minimize the chances of a false breakout by following rules similar to the ones applicable on trendline and support/resistance breakouts:
Ensure that the number of touches on the trendline or resistance are high (minimum two touches are required)
Ensure that the volume going into the pattern is low and the volume on the breakout is high.
So guy's i think now have definitely understood about Ascending Triangle Pattern Breakout. So if you see this type of pattern on chart, then go for long with proper stop loss.
Levels i already have marked on chart. Please see chart for entry, exit and stop loss.
Disclaimer:- Please always do your own analysis or consult with your financial advisor before taking any kind of trades.
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Thankyou.
