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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 bull are providing a good support at a certain point - bears are unable to break through that support.
Round two:
The bears come up with a strategy - they tell themselves let the bulls have their support - for now, we will push the close lower.
Round three:
The bulls still hold the fort - the support is still strong - so the market goes up again.
Round four:
The bears although defeated by bulls near the support manage to push the close lower than round two.
Round five:
The bears try to break the support again - alas, in vain - bulls are still too powerful.
Round six:
Now, the bears push the close - near the support - lower than round four.
Round seven:
The undefeated bulls having seen the close so low and close to the support - they loose their morale completely - its just a matter of time for bears to come and conquer them.
And so, the story goes that the bears will have eventually conquered the long-held support and there is no stopping them.
Thus, the descending 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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