asc triangle
DESCRIPTION
bookTRANSCRIPT
Ascending Triangle
Strategies
Long Stock
Covered Calls
Long Calls
Short Puts
Bull Call Spreads
Bull Put Spreads
Diagonal Call
Calendar Spread
Trade Setup Always Criteria Top Down Approach: Market is STRONG and/or Stock
is in a STRONG area (sector/industry group) of the
market Uptrend: Stock has recently made a new swing high Price Relative indicator is positive From new swing high, stock trades sideways
(consolidates) in a narrow range with relatively equal
highs and ascending lows (pinching together from
below). This consolidation should bring the price back
into one of the following:
Lower Trendline
20 Day SMA
50 Day SMA
Prior Support/Resistance Level Consolidation lasts a minimum of 5 days (and often
much more) Minimum 300,000 shares of average daily volume Volume often tapers during consolidation- watch for low
volume as a clue to when stock is nearing a break out Reward to Risk ratio: minimum 2:1
No earnings date in the next 10 trading days (DO NOT
hold through earnings!) or pending news in near-term
Trade Trigger: Stock Breaks High of
Consolidation (or a
recent group of
relatively equal highs)
Entry Order: Buy Stop Limit- for
Controlled Entry
GTC Order (usually)
Stop: Trigger Price
(from above)
Limit: 10-20 cents
above stop
Initial Stop Loss
Order: Sell Stop (Mkt) below
last mini-swing low or
1 ATR below entry
GTC
Reward/Risk Exercise
Target
Entry
Stop
Reward
Risk
R/R Ratio