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This is a classic example of bulls using strategy to take control of the market - slowly by steadily.
The break of this triangle is bullish - meaning the bulls will rally the market to new heights once this formation is completed.
Here's what happens during the formation of the ascending triangle.
Round one:
The bears are resisting at a certain point - bulls are unable to break through that resistance.
Round two:
The bulls come up with a strategy - they tell themselves let the bears have their resistance - for now, we will push the close higher.
Round three:
The bears still hold the fort - the resistance is still strong - so the market goes down again.
Round four:
The bulls although defeated by bears near the resistance manage to push the close higher than round two.
Round five:
The bulls try to break the resistance - alas, in vain - bears are still too powerful.
Round six:
Now, the bulls push the close - near the resistance - higher than round four.
Round seven:
The undefeated bears having seen the close so high to the resistance loose their morale completely - its just a matter of time for bulls to come and conquer them.
And so, the story goes that the bulls will have eventually conquered the long-held resistance and there is no stopping them.
Thus, the ascending triangle is formed.
Although, the chart patterns are strong signals. We always recommend to you use two or more tools to identify and confirm the upcoming trend before placing any order.
| Forex lessons in Chart Patterns |
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