To identify the ascending triangle chart pattern, look at the shape formed by the two trend lines and verify their converging pattern, then check the market volume fluctuation to confirm any breakout. The ascending triangle chart pattern forms in the middle of an uptrend market and features a resistance area that leads to a consolidation phase or market correction. Supply and demand trading strategy focuses on the battle between buyers and sellers within the ascending triangle structure. The horizontal resistance represents a supply zone where sellers were previously overwhelming buyers. The rising support shows increasing demand absorbing supply at higher prices.

Ascending Triangle Pattern Trading Strategies

This method reduces the risk of entering on a false breakout and provides a higher probability of success. Markets can be unpredictable, despite trading tools like triangle chart patterns. No technical analysis is foolproof, so it should be used as part of a broader trading strategy. You should continually practice and refine your technical analysis skills, since understanding and applying chart patterns requires experience, vigilance, and patience.

The lower trendline is ascending as it is formed by a series of higher swing lows, so it gives a sort of ascending support level. It is considered a continuation chart pattern, which means that when it forms, the price is likely to continue in the trend direction. An ascending triangle is a bullish technical chart pattern that consists of a series of higher lows (forming the ascending trendline) and a flat, upper resistance level. An ascending triangle is a bullish chart pattern that consists of an ascending support line and a horizontal resistance line. Price consolidates between a series of higher lows and repeating highs. It implies a bullish bias and is most commonly used as a continuation signal.

Ascending Triangle is one of the most powerful and reliable continuation chart patterns in technical analysis. The ascending triangle pattern is crucial for traders as it serves as an effective gatekeeping tool, allowing them to enter a bullish market trend at an appropriate time. This pattern indicates a period of consolidation, often preceding a breakout, which suggests that a significant price movement is likely. An ascending triangle is a breakout pattern that forms when the price breaches the upper horizontal trendline with rising volume.

• This increases buying pressure, which in turn causes the price to rise during stock trading.
• The benefits of ascending triangle patterns in trading are listed below.
• Ascending triangle pattern targets are subject to market conditions, and traders have to adjust their targets to avoid incurring losses.

When formed in an uptrend during a bull market, it can result in either a reversal or continuation of the trend. To determine which way the price will go, traders should watch how the stock responds when it reaches support and breaks out above or below the triangle. FinViz has a great feature for scanning for ascending triangle patterns.

How Reliable is an Ascending Triangle Pattern?

Opening range breakout strategy pairs well with ascending triangles that complete their formation near market open. Traders wait for the initial trading range to establish before taking positions when price breaks through both the opening range and triangle resistance simultaneously. Low volume during the ascending triangle formation shows that the ascending triangle pattern is weak and may take a long time before a breakout occurs. Traders use volume when trading ascending triangle formations as confirmations to trade breakouts or indicators of genuine consolidation phases. Day trading can effectively utilize ascending triangles that form on shorter timeframes, though traders must exercise greater caution due to increased market noise.

Ascending, Descending, and Symmetrical Triangles: The Differences

The statistics for the ascending triangle pattern show a success rate of 70-85% for bullish breakouts in the prevailing market trend, with an average move of 35-46% after a breakout. Brokers offer automated pattern recognition tools on their platforms that identify the ascending triangle among other chart patterns in real time. Other brokers support custom indicators and scripts that help traders identify the ascending trendline quickly.

Sideways Market Ascending Triangles #

Technicians see a breakout, or a failure, of a triangular pattern, especially on heavy volume, as being potential bullish or bearish signals of a resumption, or reversal, of the prior trend. An ascending triangle is bearish when it occurs in a bear market during a price downtrend. When formed in an uptrend during a bull market, it can be either bullish or bearish, resulting in a reversal or continuation of the trend.

While far from a silver bullet in predicting the future, it can offer investors directional insight that helps build conviction in a trade decision. Ascending triangle chart patterns offer a potentially potent tool that traders can ascending triangle pattern use in their analysis. It leverages investor psychology and the understanding of historical price movements to help make intelligent investing decisions.

TrendSpider and FinViz enable complete market scanning for ascending triangles. Finviz is a good free pattern scanner, whereas TrendSpider enables full backtesting, scanning, and strategy testing for chart patterns. When an ascending triangle pattern fails, the stock price fails to achieve the price target or reverses back to the breakout zone.

• Ascending triangles can form on any timeframe but occur more frequently on intraday charts, 5, 15, or 60-minute time frames.
• The true breakout is often preceded by one or more false breakouts, or fakeouts.
• After all, if the target on either side gets met, the greater trend will likely follow.
• For example, you might sell a portion at a primary profit target, then set a break-even stop loss and let the rest ride.

Price Target

If price action retests and holds, there is bullish confirmation of a breakout. The ascending triangle is considered a continuation pattern, indicating price consolidations in a trend. Despite its seemingly bullish structure, the direction of the preceding trend (uptrend or downtrend) determines whether the price is likely to break above the resistance or below the support. The best way to trade the ascending triangle pattern is to trade the breakout of the resistance level or the breakdown of the support level. Despite the seemingly bullish structure of ascending triangle, the direction of the preceding trend supersedes it.

Advantages of ascending triangles

False breakouts can happen, and using additional tools may help traders avoid bad signals. Overhead resistance may stall price, or prevent it from reaching the target altogether. Make note of prior levels, important moving averages, and other potential obstacles. In response, you could consider locking in some or all your gains here too. Identify these levels and establish your contingency plans in advance. Still, you probably shouldn’t aspire to be a “pattern trader.”  Learning to use patterns is a great place to start.

That being said, our website is a great resource for traders or investors of all levels to learn about day trading stocks, futures, and options. Shooting Star patterns are interpreted as a bearish reversal pattern. I often see these “fake-out breakouts” during lunch when volume consolidates. During this time, we observed a brief increase in volume, which could cause a slight upward pressure on the price.

But you’ll eventually want (or need) to move on to more sophisticated strategies. Luckily, traditional chart patterns are easy to integrate into many different trading styles. As with all triangle patterns, you can get in on a breakout trade on either side of the formation. Like all technical analysis tools, chart patterns are just a framework for understanding price action.