Lesson 6B: Breakout Patterns - Ascending Triangle (Bullish)Hello Friends,
Welcome to the series of Lesson 6. In Lesson 6B, we are going to learn the Ascending Triangle breakout pattern. This is more of a continuation pattern rather than the reversal pattern as oppose to the Falling Wedge pattern that we learned in Lesson 6A.
Lets get straight into the topic. Please be very careful.
We will be referring to the chart above or below to get a better understanding of the topic:
What is Ascending Triangle Pattern?
Ascending Triangle is a bullish continuation pattern, which we quite often see in the crypto world. When a coin is inside the Ascending Triangle, it means it is currently being accumulated, before it breaks out.
Formation:
Lets go back to some Mathematics. We all studied what is a Right Angle Triangle correct? If we look closely at the chart above, we see that it is forming a right angle triangle.
There are two lines to this formation, one is the resistance line, which is horizontal as you can clearly see. The second is the support line which is ascending as you see and it moves up with the price (basically it is inclined moving up as we go from left to right).
The horizontal (resistance) line is formed by 2 or more equal reaction highs touching the horizontal.
The ascending (support) line is formed by 2 or more higher lows touching the ascending support line.
The Rules:
So obviously, you won't just draw an ascending triangle, and think that this is a bullish pattern. There are a few things you need to confirm before making an entry into the coin. Lets look into it.
You must be wondering, how many times the price candle has to touch the resistance line or the support line to consider this pattern valid? Here is the answer:
For the Horizontal (Resistance Line), the price candle has to touch at least TWO or more times to consider a part of this pattern valid. Notice in the chart how the price pull after touching the resistance line FOUR times.
For the Ascending (Support Line), the price candle also has to touch at least TWO or more times to consider this pattern valid. Notice how in the chart the price candle bounces after touching the support line THREE times.
Note (IMPORTANT) :
For the Resistance Line, it is preferred that the candles touching it are equal or doesn't differ in height by too much difference. Usually I only consider the patterns for which the reactions highs are equal for this pattern.
For the Support Line, it is preferred that we have reaction lows as Higher Lows. If we see a reaction low lower than or equal to the previous reaction low, this pattern will be INVALID.
Also note from the chart that there has to be a little distance between the reaction highs, or reaction lows, as you can see in the chart. Just a little is fine.
Since crypto is very volatile, the length of time this pattern occurs doesn't really matter much, but the longer the length the stronger the patter. It's that simple. I stick to 30m or more for this pattern.
I am sure you guys are understanding this really well, as this pattern is very simple to understand or do I make it simple to understand? :P
Lets take a look at the breakout setup.
Continue reading below.....
