In order to understand the role of ascending tops and ascending bottoms in the purchase and sale of stocks, it is important to have a working definition of both terms. Both ascending tops and ascending bottoms are indicators of the performance of a given stock over a period of time. While similar in many ways, both indicators do play their own unique role in the process of trading stocks. Here is some information about ascending tops and ascending bottoms that may be helpful.
Ascending tops are an example of a chart pattern that is used to measure the progress of the price of a stock over a given period of time. This form of analysis focuses on the high price of the stock, taking note of the peaks in the overall performance of the stock. The pattern emerges when a stock demonstrates a repeated ability to establish a price that is successively higher than the previous quoted price. In terms of identifying a bull market condition for the stock, this indicates the performance of the stock is considered bullish, rather than bearish in its consistent performance.
In the way of contrast, ascending bottoms takes a different view of the technical analysis. Here, the focus is on the low price of the stock. When a stock posts low prices consistently that are not indicated a rise in the price for each individual stock, then the overall performance would not be considered to be bullish. In this sense, ascending bottoms are still considered to be a bullish indicator, but not in the same way that ascending tops are thought to indicate the existence of a bull market. Essentially, the presence of a consistent ascending bottom would indicate the absence of bullish indications, while the ascending top would indicate the presence of bullish factors.
Both ascending tops and ascending bottoms are helpful in evaluating the performance of any type of stock. In fact, part of the process of analyzing any stock involves applying the basic principles of both ascending tops and ascending bottoms for the same period of time, to see which of the two indicators tend to predominate during the period of time cited. The utilization of ascending tops and ascending bottoms allows the investor to have a clear picture of any trends that seem to be occurring with the stock. Thus, paying attention to both ascending tops and ascending bottoms helps the investor to understand whether it is a time to sell the stock, hang on to the existing shares, or to buy additional shares of the stock.
