Hi, I'm KG, I'm an analyst of NOVA. We put our focus on educating our community members as much as possible. This is why we took the initiative to make a weekly blog in which we will discuss a single topic at the time. This can be patterns, risk management, position sizing etc.
To start off this blog, I will talk about the ascending triangle pattern. This pattern is a bullish setup, but how does it work? This pattern works best on 4h - daily timeframe.
First off, it's a continuation pattern, which means a triangle will often make a trend continue. Uptrend means high chance of breaking upside of triangle and vice versa.
It's important to understand how this pattern is formed to understand its value.
This pattern is formed by and uptrend coming to a RESISTANCE. This resistance gives a nice pull back and after the pullback the price tests the SAME RESISTANCE again. In order for this to work it has to show a clear resistance level. This pattern then continues to form by getting rejected by the same resistance level again, but the rejection gets weaker and weaker. This will then allow you to draw the bottom trend line on the dips.
Once the trend line is VISIBLE you can enter on 2 places like the picture shows. The “NOVA” entry is as soon as the pattern is forming. This is where you get in on the bounce of the trend line, which gives you a great risk to reward ratio. Our entry would let you be stress-free in the uptrend/retest since you are already in profit.
If you entered on the “CONFIRMED” entry you will have the risk to get shaken out because of a large amount of buy orders with the SL right under this new support. Market makers will take advantage, hunt your SL and continue the uptrend without you.
How do we get a good entry?
It's simple, enter on a touch of the trend line, put your Stop-loss below the last swing low. After you get a nice bullish bounce off the trend line, you can put your SL below your entry point, and try to ride the run-up!
Take profit points would be the resistance line and after breaking out, the next resistance is a good aim. It's crucial to be up-to-date on the market at all times, and we try to do so in NOVA. That how we could be 1 step ahead of the market!
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