Spotting and understanding triangle chart patterns can help both beginner and seasoned traders predict the best way to trade. There are many different chart patterns to watch for, so understanding the signs and signals can help make correct predictions about penny stocks. Triangle charts are easily recognized by their shape.
Triangle chart patterns appear in three different ways; symmetrical, ascending, and descending. The three different patterns foreshadow three different trends for the prices, and can send different mixed signals about the futures for prices of a penny stock.
Symmetrical triangle patterns do not make it easy to predict future bull or bear trends in a stock. But, instead signal that there is a standoff between buyers and sellers to control the price. A symmetrical triangle pattern is shown with two converging lines coming together to a point on the graph. While this pattern is going on, traders expect some kind of movement or break outside of the graph and it results in either a bull run or bear drop.
Ascending triangle patterns occur when buyers are trying to push a stock on a bullish run, but are met with resistance by sellers. A top line across the resistance level is met by an ascending line of support by buyers to form an ascending triangle pattern. Usually, buyers will win out during these patterns when they can push the price above the resistance level. It’s a faceoff between sellers and buyers trying to control the price, and more often, the buyers will win out.
A descending triangle pattern mirrors an ascending pattern, where a stock has strong support at a low, but sellers are trying to push it below that level. The same faceoff is going on between buyers and sellers trying to force the price bull or bear, and usually once the line of support is broken, the sellers win out and the stock will experience a strong bear drop.
There are three types of triangle graph patterns but, how important are they in penny stock trading? Well, often these patterns arise during the course of intraday trading. Because penny stocks are traded often, and can make larger price moves even over a short period of time, it’s important to be able to track the movement and possible bull or bear signals of a stock throughout an entire trading day.
Not following the intraday trends of a stock could mean missing important bull or bear signals, and losing a lot of money. Watching for different triangle chart patterns can help you decide the best strategy for trading a stock. Ascending triangles usually mean that a stock is going to break eventually and make a bull run, but it isn’t always a sure thing.
So it’s important to watch the patterns to find the best times to sell or buy your penny stocks. Triangle patterns are a common type, but they aren’t the only ones to watch for. Make sure you’re keeping an open eye for other patterns so that you don’t lose money on a misread signal.
