The Right-Angle Triangles

We mentioned Ascending Triangles in the preceding paragraph. The Ascending
and Descending are the Bullish and Bearish manifestations, respectively,
of our next class of patterns, the Right-Angle Triangles. In many respects, in most in fact, they perform like their Symmetrical cousins, but with this very
gratifying difference: they give advance notice of their intentions. Hence,
their names, for the supposition always is that prices will ascend out of the
Ascending form and descend from the Descending form.
The Symmetrical Triangles, as we have seen, are constructed of a series
of successively narrower price fluctuations which can be approximately
bounded across their Tops by a down-sloping line and across their Bottoms
by an up-sloping line. Right-Angle Triangles are distinguished by the fact
that one of their boundaries is practically horizontal, while the other slants
toward it. If the top line is horizontal and the bottom line slopes up to meet Ascending persuasion. If the bottom line is horizontal and the top line slopes
down, the Triangle is Descending.
These formations are perfectly logical and easy to explain. The Ascending
Triangle, for instance, pictures in the simplest and most normal form
what happens when a growing demand for a certain stock meets a large
block of shares for sale at a fixed price. If the demand continues, the supply
being distributed at that price will eventually be entirely absorbed by new
owners looking for still higher levels, and prices will then advance rapidly.
A typical Ascending Pattern starts to develop in much the same way as the
“ideal” Symmetrical Triangle previously described, with an advance in our
certain stock from 20 to 40 where sufficient supply suddenly appears on the
market to fill the orders of all buyers and produce a reaction. Sensing the
temporary satiation of demand, some owners may dump their holdings on
the decline, but offerings are soon exhausted as prices drop back to, say, 34,
and renewed demand then stimulates a new rally. This runs into supply
again at 40, and again, all buyers are accommodated at that level. The second
recession, however, carries quotation down only to 36 before another upmove
develops. But the pool or inside group that is distributing at 40 still
has some of its holdings left to sell, so it may take more time, another backing
away and another attack at the 40 line, before the supply there is exhausted
and the trend can push along up.