triangle pattern | PELtriangle pattern formation in Piramal Enterprises Ltd.
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At the start of its formation, the triangle is at its widest point. As the market continues to trade in a sideways pattern, the range of trading narrows and the point of the triangles formed. In its simplest form, the triangle shows losing interest in an issue, both from the buy-side as well as the sell-side : the supply line diminishes to meet the demand.
Think of the lower line of the triangle, or lower trendline, as the demand line, which represents support on the chart. At this point, the buyers of the issue outpace the sellers, and the stock's price begins to rise. The supply line is the top line of the triangle and represents the overbought side of the market when investors are going out taking profits with them.
