Ascending Triangle Chart Pattern

The lower trendline should be horizontal, connecting near identical lows. An ascending triangle is a type of triangle chart pattern that occurs when there is a resistance level and a slope of higher lows. The ascending triangle pattern forms as a security’s price bounces back and forth between the two lines.

• An ascending triangle is a type of price action pattern, a chart of security’s price movement over time.
• That’s because they point to the continuation of a downtrend or the reversal of an uptrend.
• The price must touch these lines at least twice before a breakout occurs.
• As you can see in the chart above, the upper line is not exactly flat.
• Using stop-losses on the opposite side of the trend is another tool traders can use to reduce risk in a potential ascending triangle breakout or breakdown scenario.
• With the ascending triangle, we can have a perfect head start, and see the trading opportunity before it happens.

Trade can only be entered after the price gives a clear breakout of the upper or lower trend line. Most of the time after breakout the price will fall up to 100% of the depth. A descending trend line is bound by two trend lines connecting a downward slope trend line and flat trend line connecting the swing low. Most of the time after breakout the price will rise to 100% of the depth.

How to Trade Triangle Chart Patterns

If the triangle is $10 high for instance, add $10 to the upside breakout point to get the price target. If the price is less than that, the profit target is the breakout point less of $10. The location of the ascending triangle in relation to the trend is important. It will determine if there will be a continuation or a reversal in the trend. It is possible for the ascending triangle to appear at the bottom of a downtrend. This means that the downward momentum is fading before it changes direction.

77.77% of retail investor accounts lose money when trading CFDs with this provider. However, in some cases, the support line will be too strong, and the price will bounce off of it and make a strong move up. If we set our short order below the bottom of the triangle, we could’ve caught some pips off that dive.

What does an ascending triangle indicate?

In this case, the price ended up breaking above the top of the triangle pattern. They keep putting pressure on that resistance level and as a result, a breakout is bound to happen. What happens during this time is that there is a certain level that the buyers cannot seem to exceed. However, they are gradually starting to push the price up as evidenced by the higher lows. Before the breakout comes we can look at the action inside the consolidation to decide if it’s worth taking the breakout or if it’s better to just wait for another trade.

Wait for a significant candlestick close above the resistance level to validate the pattern. You want to have the patience to wait for clear signals and avoid impulsive decisions. Here’s a video by our trading analysts on how to identify and trade the ascending triangle pattern. Still, you don’t need to be a rocket scientist to discover the pattern. Essentially, what you need to do is find a price consolidation during an ongoing trend. Secondly, try to identify the upper resistance line with at least two highs which will help you determine the upper line.

Is an ascending triangle bullish or bearish?

The ascending triangle is a bullish continuation pattern and is characterized by a rising lower trendline and a flat upper trendline that acts as support. This pattern indicates that buyers are more aggressive than sellers as price continues to make higher lows. The pattern completes itself when price breaks out of the triangle in the direction of the overall trend. While an ascending triangle chart pattern can sometimes provide bearish signals, they are largely considered bullish formations because they’re uptrend continuation patterns. The pattern offers valuable insights into potential upside breakouts and when an upward market trend is likely to resume after a consolidation phase. They can be either a continuation pattern, if validated, or a powerful reversal pattern, in the event of failure.

Have you ever seen a stock exhibiting normal trading behavior and then all of a sudden the stock price drastically drops out of nowhere? This type of price action could be related to the announcement of a shelf offering or the execution of an “at-the-market” sale from… Ascending triangles are most effective https://g-markets.net/ when they appear within the context of an uptrend. These are the most common pros and cons of trading the ascending triangle candlestick pattern. As you can see, the length of the AB line is equal to the CD line, which may help in identifying the ideal profit target at the point of a breakout.

Is an Ascending Triangle Bullish?

Prices move to a high, which inevitably meets resistance that leads to a drop in price as securities are sold. Many technical analysts trade the breakout without first taking ascending triangle pattern the time to understand what goes behind the scene. With the ascending triangle, we can have a perfect head start, and see the trading opportunity before it happens.

We introduce people to the world of trading currencies, both fiat and crypto, through our non-drowsy educational content and tools. We’re also a community of traders that support each other on our daily trading journey. In this case, we would place entry orders above the upper line (the lower highs) and below the support line.

Ascending triangle patterns work off the assumed psychology of investors. As the price rises, fewer interested buyers enter the market, until the price ultimately peaks. When you detect increasing lows in the price chart and at least two highs at approximately the same level, it is necessary to draw lines connecting them at one point. Thus, you can draw a triangle with a rising lower line and a horizontal upper line. The ascending triangle pattern is very similar to the rising wedge pattern, which is why many traders, especially beginners, confuse them. The ascending triangle pattern has a well-functioning trading system with specific market entry/exit points, as well as determining the stop loss level.

At this point, you could check to see if the pair’s trading volume has risen sharply to provide a reliable confirmation signal. If that is the case, you could enter into a long position in EUR/USD anticipating further upward movement in that currency pair’s exchange rate. It would help if you bought the breakout of the horizontal resistance trendline.

This presentation discusses technical analysis, other approaches, including fundamental analysis, may offer very different views. The examples provided are for illustrative purposes only and are not intended to be reflective of the results you can expect to achieve. This article is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. Investing involves risk regardless of the strategy selected and past performance does not indicate or guarantee future results. Trading leveraged products such as Forex and Cryptos may not be suitable for all investors as they carry a degree of risk to your capital.

Support and resistance levels represent points on a price chart where there is a likelihood of a letup or a reversal of the prevailing trend. Support occurs where a downtrend is expected to pause due to a concentration of demand, while resistance occurs where an uptrend is expected to pause due to a concentration of supply. In an ascending triangle pattern, the upward-sloping lower trendline indicates support, while the horizontal upper bound of the triangle represents resistance. A symmetrical triangle doesn’t match the idea of continuing the previous direction.

Commodity and historical index data provided by Pinnacle Data Corporation. The information provided by StockCharts.com, Inc. is not investment advice. Increasing volume helps to confirm the breakout, as it shows rising interest as the price moves out of the pattern. The price must touch these lines at least twice before a breakout occurs.