In this lesson, we will see how the presence of a 60 min ascending triangle at the 60 min 200 MA help to point to a short term breakout.
If an ascending triangle appears at a support level, then it could be a bullish reversal pattern.
Take a look at the charts below to learn some important lessons.
The chart above is the 60 min chart of SPX. As the index dropped to the 60 min 200 MA, it formed a nice 60 min ascending triangle. This is characterized by higher lows and a relatively same highs.
There was also a bullish cross where the 60 min 20 MA cross back above the 50 MA. This is a picture of strength.
The 60 min 20 MA went above the 50 MA and both of them are above the 200 MA. This is where the conditions are perfect for a 60 min uptrend.
SPX broke out of the ascending triangle and rose from there.
Eventually things started to be a bit choppy and it dropped below the 60 min 50 MA. This is a sign of weakness. It also drop below a 60 min consolidation. A sign of topping and a change of trend from bullish to bearish.
Look how much the SPX dropped.
When you study what happen in the 60 min chart, you also need to look at the daily chart for confirmation.
As you can see, the SPX was in a strong uptrend. It was trading above the daily 20 MA, 50 MA and 200 MA. SPX had a slight correction to a congestion area support.
Notice how a bottoming tail, a doji and then a green bar appear.
This told traders that the downward momentum was slowing down and the SPX was ready to move higher.
Hope this lesson helps you in understanding how the SPX reversed trend in the 60 min chart.
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