Ascending Triangle Pattern

Ascending Triangle is a chart pattern used in technical analysis which is created by price moves that allows for a horizontal line to be drawn along the swing highs and a rising trendline to be drawn along the swing lows. The two lines form a triangle.

What Is An Ascending Triangle Pattern ?

The ascending triangle is a bullish continuation pattern and is characterized by a rising lower trendline and a flat upper trend line that acts as a support. Ascending triangle pattern indicates that buyers are more aggressive than sellers as price continues to make higher lows. When the price breaks out of the tringle in the direction of the overall trend the pattern gets completed.

Features of Ascending Triangle Pattern

  1. Strong Trend: In order for the ascending triangle to exist in the first place, the price action must start from a clear uptrend.
  2. Temporary Pause: This element refers to the consolidation phase, which will help the buyers consolidate their strength.
  3. Breakout: – The break of the upper flat line marks the breakout which activates the pattern. It also helps us determine the entry take profit, and stop loss at large.

Ascending Triangle Pattern Interpretation

In the ascending triangle pattern the upper trend line is flat and the bottom trend line rises above. As the prices trend above with the peaks and trough, prices face resistance and there is temporary reversal. Each of the troughs forms at the higher levels. The formation of this triangle occurs when the prices close above the resistance level along the peaks. The prior uptrend continues when the price breaks the resistance.  Volume is low during the formation of the pattern.

Components of Ascending Triangle

  • Preceding Uptrend

Ascending triangles normally form after an uptrend and the pattern signals a continuation of that uptrend. So, an ascending triangle should ideally be formed after a stock has experienced significant gains before meeting an area of resistance.

  • Resistance Area

The area of resistance forms the upper, horizontal line of an ascending triangle pattern. For the pattern to form, this resistance area should be tested several times. The more times that the resistance area is tested and not broken through, the stronger the eventual breakout may be.

  • Ascending Lows

The price of a stock in an ascending triangle pattern will oscillate between testing the resistance area and setting a series of lows, each one higher in price than the prior low. These lows form an ascending trendline that may be tested repeatedly as the pattern progresses.

  • Breakout

A bullish breakout above the resistance area signals the completion of an ascending triangle pattern. This breakout should occur on above-average volume. The expected magnitude of the breakout above the resistance line is equivalent to the price difference between the resistance line and the lowest low at the beginning of the triangle pattern.




Hello world!

Welcome to WordPress. This is your first post. Edit or delete it, then start writing!