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Cardinal Reversal Patterns - At Tops
4. The Ascending Top
The ascending top is a rare and unusual pattern because the aggressive
upward trend is followed by an immediate reversal of momentum. The price
action reflects an inordinate amount of demand for shares that, once satisfied,
leaves a shortage of buyers beneath the recent price levels. This particular
price pattern can occur toward the end of a persistent upward trend. The
overall attitude for the market may be bordering on panic buying. At that
point, however, some news item causes a major wave of profit-taking, aggressive
short selling, and inspires latecomers to move to the sidelines instead
of taking advantage of a temporary setback. Because of the swiftness of
the decline, a distribution phase of the shares may not occur, and so,
this pattern may evolve into another distribution pattern, such as a descending
triangle.
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