The ascending triangle, often referred to as the ‘rising triangle’, is one of the top continuation patterns that appears mid-trend. Traders anticipate the market to continue in the direction of the larger trend and develop trading setups accordingly. Typically, an ascending triangle is formed on an uptrend, thereby continuing the direction of price movement.
Anyone trading Forex or any other financial markets for a while knows that trends don’t last long. In fact, the majority of a trader’s screen time is spent looking at a price chart where the currency pairs move up and down between a narrow range. However, during those few precious moments of a trending market, the price action often gives out hints about whether the trend will continue or reverse. To get a sense of what will happen after a triangle pattern breaks, it can help to take a look at what happened before the triangle pattern started forming. If the price is in an overall uptrend, you might expect the price to move higher eventually, even if it initially breaks out below the triangle.
- In this case, the pattern eventually turned out to be bullish, leading to upward momentum after it broke out of the rising wedge.
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To determine a profit target, it can be useful to start at the breakout point and then add or subtract the height of the triangle at its thickest point. At this point, you would have entered the market with a sell order. Similar to trading the ascending and descending triangle patterns, the initial profit target of the trade would be equal to the size of the symmetrical triangle patterns. Here, the Stop Loss should be just above the ascending trend line (opposite side) of the bar that broke the triangle. They can be either a continuation pattern, if validated, or a powerful reversal pattern, in the event of failure.
What Is an Ascending Triangle Pattern?
This occurrence signals the continuation of the prevailing bearish trend. As the name suggests, the ascending triangle carries with it bullish connotations and typically forms in an uptrend, vice versa for the descending triangle. With the swing highs and lows of the pattern, one will be able to draw a flat trendline at the top and an upward sloping trendline at the bottom for the ascending triangle pattern.
If you’re looking for a simple bullish pattern, the ascending triangle pattern is one worth knowing. Connecting the start of the upper trendline to the beginning of the lower trendline completes the other two corners to create the triangle. The upper trendline is formed by connecting the highs, while the lower trendline is formed by connecting the lows.
In a chart, you can see this process as the formation of a triangle. Explained below are several effective forex trading strategies that can help you capitalize on the potential breakout rising triangle pattern trading opportunities presented by the ascending triangle pattern. An ascending triangle is formed by rising swing lows, and swing highs that reach similar price levels.
- The opposite version, on the other hand, the descending triangle pattern, is a bearish pattern that signals a downward trend that is expected to continue.
- Some leeway on the bottom would be recommended amid the imperfect pattern in practice.
- In an ascending triangle pattern, the upward-sloping lower trendline indicates support, while the horizontal upper bound of the triangle represents resistance.
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- It is created by price moves that allow for an upper horizontal line to be drawn along the swing highs, and a lower rising trendline to be drawn along the swing lows.
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Example of How to Interpret the Ascending Triangle Pattern
The pattern is confirmed when the price breaks below the lower support trendline, often accompanied by declining volume. Traders and investors generally use additional technical indicators for validation. Three forms of the triangle continuation patterns exist including the symmetrical, ascending and descending triangle patterns.
Spencer is an avid globetrotter who achieved financial freedom in his 20s, while trading & teaching across 70+ countries. As a former professional trader in private equity and proprietary funds, he has over 15 years of market experience, and has been featured on more than 20 occasions in the media. In our final strategy, instead of looking for a breakout in the prior trend direction (strategy #2), we now look for a breakout in the opposite direction, in other words a trend reversal. Note that this strategy works just as well in a downtrend, you’ll just have to flip the pattern around for a downside breakout. This means that instead of compressing prices into a fixed breakout point some time within the pattern, this pattern sees prices moving further and further away from each line in the pattern. We introduce people to the world of trading currencies, both fiat and crypto, through our non-drowsy educational content and tools.
Expanding Triangle Trading Strategy #2
In this case, the pattern eventually turned out to be bullish, leading to upward momentum after it broke out of the rising wedge. Had it broken down instead, it probably would have continued with downward action. If it breaks downward out of the triangle, it’s considered bearish. This is almost always needed for the stock to break out of the ascending triangle. If you see a stock breaking out of an ascending triangle with little volume coming in … be careful.
What Is an Ascending Triangle?
Different traders enter the market at different times with different trading strategies. Some market participants will reduce their exposure after the initial trend to take some profits off the table. Some will add more exposure to their existing positions with the hope to capture the entire trend in order to maximize their profits.
There are several actions that could trigger this block including submitting a certain word or phrase, a SQL command or malformed data. 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 you had placed another entry order below the slope of the higher lows, then you would cancel it as soon as the first order was hit.
Trading Triangles with Preemptive Market Entry
It is possible for the ascending triangle to appear at the bottom of a downtrend, indicating that the downward momentum is fading before potentially changing direction. Therefore, the location the pattern appears in is crucially important. The ascending triangle is a very clear technical analysis pattern, which, unfortunately, is not very common.