Figure 1: ascending triangle example

As shown in Figure 1, the price chart of Boustead shows a resistance at $2.03 thereabouts. For 3 months from Apr'07 to Jun'07, it is unable to breakout from this resistance. However, it must be noted that the price retracement from the resistance achieved the higher low characteristic. This is a very bullish sign as it meant that investors are very keen to buy and the buying pressure is strong as the price is unable to trade lower. On late June'07, the price broke out of the resistance and went on to new high. Do note that it is away from the apex of the triangle.

Second in line is descending triangle. As the name suggest this price pattern is biased to the downside. Instead of a flat resistance as in the case of an ascending triangle, for a descending triangle we will be looking out for a flat support. The price will have seem to have found support at a particular price and that gives investors an impression that the price seems to be holding at this level very well. Not obvious to the untrained eyes, every price rally is actually getting lower. Then a breakout to the downside will catch investors unaware.