Hello dear friends. To achieve stable performance in financial markets, we should combine fundamental and technical analysis. Not only should we constantly monitor market news, but we should also conduct consistent technical analysis. Chart patterns, which are part of technical analysis, are among the most valuable tools for traders. Chart patterns enable traders to better follow changes in the market and thus allow them to manage their positions. Today, I will try to provide information about the "Ascending Triangle" pattern that you can use to improve your trading.
What is the Ascending Triangle Pattern?
The Ascending Triangle is a neutral chart pattern that forms
in an uptrend. This pattern usually occurs during a bullish trend and many
people think that the trend will continue, so some traders define it as a
continuation pattern. However, although the Ascending Triangle pattern mostly
signals the continuation of the uptrend, sometimes it can also signal a
reversal of the trend. For this reason, it is considered a bilateral pattern.
Everything depends on the direction of the breakout. If the price breaks out to
the upside, the trend continues. On the other hand, if there is a downside
breakout, the trend may experience a reversal.
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| The Ascending Triangle Pattern |
How Does the Ascending Triangle Pattern Form?
The Ascending Triangle gets its name because, on a price chart, it literally looks like a triangle taking shape. This pattern forms when the price repeatedly bounces between two key levels, with a flat resistance line at the top and an upward-sloping support line at the bottom. Over time, these movements squeeze the price into a triangular shape. The top horizontal line shows the resistance level, the point where the price repeatedly struggles to break through. Meanwhile, the rising lower line connects a series of higher lows, showing that buyers are gradually pushing the price upward. Put together, these two lines create the structure of the Ascending Triangle.
Flat Upper Line
At the very top of the Ascending Triangle, you'll notice a flat, horizontal line forming. This happens because the price keeps climbing up to roughly the same level but just can't seem to break past it. It's almost like the market keeps hitting a ceiling. No matter how many times it tries, it just gets pushed back down. That repeated failure to move higher is what turns this area into a clear resistance level. Traders usually draw this line by connecting a series of peaks where the price has topped out. Since those peaks are all lining up around the same level, the line doesn't tilt up or down at all. In technical terms, its slope is zero, which is just a fancy way of saying it's completely flat.
The more times the price touches this upper line without breaking through, the stronger that resistance is considered to be. It signals that sellers are active around that level, but at the same time, buyers aren't giving up. They keep pushing the price back up for another attempt. This tug-of-war is exactly what makes the pattern so interesting to watch.
Rising Lower Line
On the bottom side of the Ascending Triangle, we see the opposite of the flat upper line. Here, the lows keep getting higher each time the price pulls back. In other words, every dip in price stops at a level that's higher than the last one. When you connect these rising low points together, you get what's called the rising lower trendline. This line acts like a support zone, almost like a floor that keeps lifting the price higher and higher. As long as the price doesn't fall below this line, buyers are clearly in control, steadily pushing the market upward. Unlike the flat upper line, this one slopes upward. In technical terms, its slope is positive, which simply means the line is angled higher instead of flat. The fact that lows keep climbing shows that buying pressure is increasing. Buyers are willing to step in at higher prices each time.
Breakout and Trading Signals in the Ascending Triangle
The Ascending Triangle pattern often suggests one of two things: either the current uptrend will continue, or the market might be preparing for a reversal. The key factor that decides which way the price goes is the breakout point. If the price breaks above the resistance line, the flat upper boundary, it signals an upward breakout. This usually means the trend is continuing, and many traders see this as a chance to enter long positions. On the other hand, if the price falls below the rising support line, it suggests that the pattern has failed. In that case, the market could either reverse direction or pull back temporarily, which is why some traders might prefer to take short positions. For a breakout to be considered valid, traders usually wait for confirmation. This comes in the form of a strong, full-bodied candlestick that closes clearly above the resistance or below the support. Without this confirmation, there's always the risk of a false breakout, where the price briefly breaks the line but quickly snaps back.
When the price does break through the upper resistance line with strength, it's often treated as a buying opportunity. But volume matters a lot here: if the breakout happens on weak or low trading volume, it may mean that not all market participants are convinced, increasing the chance that the price could fall back into the triangle. Conversely, when the breakout is supported by a surge in trading volume, it shows stronger market conviction, making the buy signal far more reliable. That's why many traders wait for both the breakout and higher-than-average volume before placing a buy order. This combination of the price breaking the resistance and volume confirming the move gives the setup more credibility and reduces the risk of being caught in a false move.
- Entry (Buy): The entry point for buying can be determined near the breakout level of the upper line or after a rapid pullback following the breakout.
- Stop Loss: The stop loss order can be placed slightly below the bottom line (support line) of the triangle.
- Target: The target price is often calculated by moving upward by the height of the triangle. Additionally, Fibonacci levels or other technical analysis tools can also be used for setting targets.
Below, you can see an example of a trade made with the
Ascending Triangle pattern in the chart. The Chinese Yuan/Indian Rupee
(CNH/INR) currency pair formed an Ascending Triangle pattern on the daily
chart, and prices continued their ascent by breaking above the upper line
(resistance level):
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| Ascending Triangle on the CNH/INR chart |
When the price falls below the rising lower line (support line), this is generally considered a sell signal, making trading at this
point attractive. This breakdown could indicate the
end of the uptrend and a reversal of prices to the downside. In this case, an
increase in trading volume can indicate that the breakdown is a more reliable
signal. A high trading volume indicates that more traders have noticed this
breakdown and are trading accordingly. This increases the chances of the price
continuing its downward movement. Therefore, when the price breaks below the
lower trendline and an increase in trading volume is observed, this situation
can be considered a selling opportunity.
- Entry (Sell): A sell order can be placed when the price breaks below the rising lower line (support line).
- Stop Loss: The stop loss order can be placed slightly above the upper line (resistance line) of the triangle.
- Target: The target price can usually be calculated by moving downward by the height of the triangle. Additionally, risk-reward ratios, moving averages, Fibonacci levels, or other technical analysis tools can also be used for setting targets.
When you examine the chart below, you encounter a trading
example utilizing the Ascending Triangle pattern. The Euro/US Dollar (EUR/USD)
currency pair formed an Ascending Triangle pattern on the daily chart and broke
below the lower line (support level), indicating a trend reversal:
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| Ascending Triangle on the EUR/USD chart |
Remember: There is always uncertainty and risks involved in financial trading. Like other technical analysis patterns, the Ascending Triangle can provide false signals and should not be used alone. Therefore, applying risk management principles is essential when trading. It is preferred to use it in conjunction with other technical analysis tools and indicators to reduce risks and increase profitability while determining trading strategies.