The ascending triangle is one of the most recognisable chart formations in technical analysis. Characterised by a flat upper boundary and a rising lower trendline, it reflects a gradual build-up of pressure in the market. This pattern is closely watched by traders across stocks, forex, commodities, and cryptocurrencies*, as it often precedes decisive price movement. In this article, we’ll explore how to identify the ascending triangle and apply it in trading.
An ascending or rising triangle is a bullish chart pattern that usually signals a trend continuation. It is framed by two trendlines. The upper line connects highs placed at almost the same level, while the lower line is angled and connects higher lows.
The triangle’s appearance is explained as follows: buyers try to push the price up, but they meet a strong resistance level, so the price rebounds. Still, buyers have strength, which is reflected in higher lows. Therefore, they continue pushing the price until it breaks above the resistance level. The period during which the price bounces back and forth between the two lines depends on the timeframe. On daily charts, the triangle can be in place for over a week.
Note: The ascending triangle is a continuation chart pattern but sometimes it can be used as a reversal signal. It happens when the ascending triangle occurs in a downtrend. It’s the biggest challenge of all the triangles.
The rising triangle is one of the setups in the triangle group. There are also descending and symmetrical formations.
The triangle group of patterns comprises ascending, descending, and symmetrical formations.
The ascending triangle is a bullish formation and the descending triangle is bearish. At the same time, the symmetrical triangle is a bilateral setup that signals a rise and a fall in the price.
To distinguish between them, traders draw trendlines. In a rising triangle pattern, an upper trendline is horizontal and connects equal or almost equal highs, while the lower trendline is rising as it connects higher lows. In a descending or falling triangle pattern, the lower trendline is horizontal and connects equal or almost equal lows, while the upper trendline declines, going through lower highs. A symmetrical triangle has a falling upper line that connects lower highs and a rising lower line that connects upper lows.
It’s quite easy to identify the formation on a chart. Still, there are a few rules that may help a trader determine its strength.
The rising triangle pattern is usually considered a continuation setup formed in an uptrend. Still, if the ascending triangle is in a downtrend, it may signal a trend reversal. The trading rules will be the same in both cases.
As with most chart patterns, triangles have specific rules that traders may use to place entry and exit points.
The theory suggests trades go long when the price breaks above the setup's upper boundary. In a conservative approach, traders wait for the price to form at least several candles before entering the market. In a risky strategy, traders open a position as soon as the breakout occurs, and the breakout candlestick closes.
It's worth considering trading volumes as breakouts often turn into fakeouts, meaning the market returns to its previous trend. The chance of a strong breakout is higher if the volumes are high.
However, increased volumes aren't the only tool used to confirm a breakout. Many traders consider trend indicators and oscillators to potentially limit the risks of bad trading decisions.
A standard take-profit target equals the size of the largest part of the setup and is measured just from the breakout trendline.
Traders consider several options when placing stop-loss levels. In a conservative approach, they implement the risk/reward ratio, which is usually 1:2 or 1:3 but depends on the trader's willingness to take risks. Also, traders utilise the upper trendline as a threshold and place the stop-loss order just under it.
Note: These are general rules. However, traders can develop their own trading strategies and adjust the pattern's settings and rules according to their trading approach. You may try the FXOpen TickTrader platform to practise identifying triangles on live charts.
A bullish ascending triangle pattern formed on the daily chart of the EUR/GBP pair. The price skyrocketed, and as a result, the rising triangle formed, allowing bulls to take a break. As the trend wasn’t solid, a trader could go long as soon as the breakout candle closed (1). Otherwise, the trade would fail. A take-profit target would equal the size of the triangle’s widest part (2) and be measured just from the upper trendline. A stop-loss level of 1:2 or 1:3 risk/reward ratio would work (3).
In this strategy, traders observe an existing bullish trend and the formation of an ascending triangle, which suggests the potential for a continuation pattern. Incorporating a short-term moving average, such as a 9-period EMA, provides dynamic support, aligning with the trendline to strengthen the setup.
This formation has advantages and pitfalls that traders consider when developing their strategies.
The ascending triangle is one of the more common chart patterns traders use when trading various assets. Still, there is no guarantee that it will work every time you spot it on a price chart. It's vital to remember that every signal must be confirmed with other indicators, chart patterns, or candlesticks. Also, it's a well-known fact that any trade involves risks that should be considered every time a trader enters the market. Improve your skills by practising on different assets and timeframes.
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An ascending triangle is formed when the price action creates a series of higher lows while facing a resistance level, resulting in a horizontal upper trendline and a rising lower trendline. The price consolidates between these two lines before potentially breaking out above the resistance, signalling a bullish continuation.
The ascending triangle is a bullish pattern. It suggests that buyers are gaining strength as higher lows form, increasing the likelihood of a breakout above the resistance level. There is a descending triangle pattern that usually appears in a downtrend, signalling a downward movement.
According to the theory, in triangle pattern trading, it’s common to enter the market when the price breaks above the upper trendline of the triangle. In a conservative approach, traders wait for confirmation through several closing candles after the breakout. The increased volume also adds confidence to the trade.
A retest occurs when the price breaks out of the triangle but then briefly falls back to test the former resistance level. A successful retest confirms the breakout and can provide an additional entry point.
The formation of a bullish triangle pattern can vary based on the timeframe. On daily charts, it can take several days to weeks, while on shorter timeframes, it might form within hours.
In comparing the ascending triangle vs. the rising wedge, it’s important to recognise that the rising wedge has converging trendlines, signalling a possible weakening trend, often leading to a bearish reversal. In contrast, an ascending triangle trading pattern typically signals a continuation of the uptrend.
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