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Learn why traders use futures, how to trade futures, and what steps you should take to get started.
- 13 Mar 2018
- By Trading Central
- Topics: General Education
Ascending triangles are bullish patterns, usually seen in an uptrend as a continuation pattern, recognized by its unique shape formed with two trend lines: the resistance line is drawn horizontally at a level that has prevented the price from going higher while the supporting trend line connects a series of higher lows. In a downtrend, these right- angle triangles can form a reversal pattern. A common target price can be based on the height of the triangle.
As the upside potential is limited by the 2800.00 measured move of the pattern, a bull spread allows you to lower the cost of the strategy (in comparison to a straight long call) by selling a call out of the money. As a result, the strategy consists of the simultaneous purchase of a call with a strike at 2745.00 and selling a call with a Strike at 2700.00 (measured move of the ascending triangle pattern).
| Trading Symbol | ES H8 |
| Strategy | LONG |
| Entry Point | 2730.00 |
| Target | 2800.00 |
| Stop Loss | 2684.00 |
| Contract Expiry | MAR 2018 |
POTENTIAL GAIN PER CONTRACT
Atargetof 2800.00 is calculated by anticipating a measured move between the triangle’s low and high and then projecting this range to the upside from where the prices broke to the upside. Another idea is to take full or partial profit at the next major resistance level set at 2760.00.
POTENTIAL DOWNSIDE PER CONTRACT
Once the position is open, if prices fall below the 2684.00 support level the futures position should be closed as the strategy failed to materialize.
Euro: 6E
Corn: C
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About Trading Central
Trading Central is a leading provider of independent investment research to financial market professionals, specialising in the field of technical analysis. Founded in 1999, Trading Central now has offices across North America, Europe and Asia, providing research to over 200 leading investment banks, FCMs, hedge funds, brokers and exchanges in over 45 countries.
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