As I mentioned in my previous email we have been witnessing behavioral changes in the sharemarket since May of this year. Instead of an extreme strong bull market (March 2003 to May 2006) the market has become undecided about which direction to head and has been rising and falling within a narrowing range.

A tricky time for inexperienced traders, even I during this time have needed to focus my attention on more advanced methods of analysis using Chart Patterns.

Since there are numerous chart patterns which can provide us with valuable insight during these more challenging times, I have decided to do two things:

• Share with you how to identify certain patterns in a series of emails.
  
  
• Provide a training day ‘Patterns for Profit’ exclusively around using these exciting charting strategies so that you too can achieve consistent winning results during these times in your trading.

Last time we covered how Chart Patterns works. This week I am going into more depth with a chart pattern called an ‘Ascending Triangle’.

The Ascending Triangle Pattern

Ascending Triangles are generally considered bullish and are most reliable when found in an up-trend. The top part of the Triangle appears flat, while the bottom of the Triangle has an upward slant.

What does a typical Ascending Triangle pattern look like…

• In Ascending Triangles, the stock becomes overbought, so people are no longer willing to pay a higher price.
  
  
• This creates a price ceiling (called Resistance) at point A.
  
  
• Prices then turn back down until it reaches point B which forms Support.
  
  
• Buyer interest then rises again and prices soon reaches the old price high at point C where prices once again turn back down until it reaches point D.
  
  
• Buyers then take control again, however from a higher point because of the upward sloping Support.
  
  
• Prices eventually break through the old highs at point E and are propelled even higher as new buying comes in.

Consider this pattern to be a tug of war between buyers and sellers. Buyers cause prices to push higher. Sellers cause prices to push lower. Sellers gradually loose the battle and finally at point E the battle is won by the Buyers.

Next week I will cover the ‘Flag Pattern’

To Your Success,

Jules Dawson

Jule Corporation Pty Ltd
PO Box 1241 Mullumbimby NSW 2482
Telephone: 1300 557 881
Email: info@julecorp.com
Web: www.julecorp.com