DEFINITION of 'Ascending Tops'

This refers to a series of peaks, each peak higher than the previous one on the stock's chart pattern. Ascending tops are created following a previous and subsequent trough. This may look like a mountain range in which each mountain top is higher than the last.


The chart below illustrates a series of four ascending tops.

Ascending Tops



BREAKING DOWN 'Ascending Tops'

For technical analysts this is considered a very bullish indicator. The ascending tops pattern points to a situation where the market has determined that the price of a stock is intrinsically greater than it was during the previous period, when traders sold off the security following a high. The sell-off might be viewed as profit taking, thus explaining the security's subsequent rise to a new high.

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