Chart Patterns  |  SEP 2007

The Angle Of Ascent by Martha Stokes, CMT

The Angle Of Ascent by Martha Stokes, CMT Understanding the concept of the angle of ascent will help you make strong entries and protect your profits. Successful traders know that technical analysis skills require an understanding of buy signals and indicators. Today, we tackle angle of ascent. Angle of ascent involves price, which is the most important aspect of technical analysis and an indicator onto itself. Yes, price is an indicator — the most important of any. Why? Because the stock market, while closely tied to mathematical concepts, is even more closely related to biology. If that seems foreign, think of it this way. Humans are not mathematical formulas; we are biological creatures. We think with our minds and emotions and feel our way through life. Human beings move price action in the stock market. Consequently, the ability to analyze price action and determine what it is telling you is a crucial, and generally misunderstood, aspect of trading and investing. Price analysis is overlooked so often that traders bond in solidarity at trade shows, discussion forums, and lecture circuits over the common problem. The gist of the issue is this: When traders go in search of stocks to trade, they often enter stocks just as a run is weakening or about to reverse. If you understand the concept of angle of ascent, you will be able to avoid weak entries and protect profits against bounces, whipsaws, and trend reversals. WHAT IS IT? The angle of ascent is the degree at which price rises in its trendline. It is relevant to all trading and investing timelines and can forewarn of weaker entries and topping and bottoming patterns before these patterns can be identified. Traders who use angle of ascent analysis increase their success rate by discarding weaker angle patterns and selecting more ideal entries for their trades.

by Martha Stokes, CMT