Ascending Triangle Elliott Wave Pattern

For example, if a long trade is taken on an upside breakout, a stop loss is placed just below the lower trendline. Note that most stock screeners can be set to identify ascending triangle patterns when they occur in the course of a stock’s price movement. Because the ascending triangle is a bullish pattern, it’s important to pay close attention to the supporting ascension line because it indicates that bears are gradually exiting the market. Bulls (or buyers) are then capable of pushing security prices past the resistance level indicated by the flat top line of the triangle. Many technical analysts trade the breakout without first taking the time to understand what goes behind the scene. With the ascending triangle, we can have a perfect head start, and see the trading opportunity before it happens.

The ascending triangle pattern may occasionally occur in an overall prevailing downtrend. As the name suggests, the price action pattern is generally considered as a price action indicator of a continuing uptrend. However, it may sometimes serve as a market reversal signal. An Ascending Triangle is a bullish chart pattern, commonly found either at the bottom of a trend as a reversal pattern or mid-trend as a continuation pattern.

Advantages of the triangles pattern

In addition,StocksToTrade accepts no liability whatsoever for any direct or consequential loss arising from any useof this information. With symmetrical triangles, you’ve got an even amount of space on either side. I like certainty and consistency in my trading, so I prefer to wait for the breakout. Therefore, it requires a certain level of experience and judgment to identify the pattern, in particular the upper flat line that acts as a crucial resistance line. Whether you’re a seasoned trader or just getting started, mastering your day trading psychology can help you achieve your objectives.

In this case, we can expect a change in the trend, from bearish to bullish. In this guide, you’ll learn how to place a trade using the ascending triangle pattern. This is a breakout trading strategy that has the advantage of highlighting breakouts in advance.

Triangle Breakouts Like Ascending Triangle Breakouts

The stock comes up, hits resistance, and pulls back to support. This platform has over 40 built-in scans, and you can customize your own scans, too. Get a 14-day trial for just $7 to see how powerful scanning with StocksToTrade can be. These results and performances are NOT TYPICAL, and you should not expect to achieve the same or similar results or performance. Your results may differ materially from those expressed or utilized by Option Strategies insider due to a number of factors. Chris Douthit, MBA, CSPO, is a former professional trader for Goldman Sachs and the founder of OptionStrategiesInsider.com.

• Never give up on this difficult way which we are going to overcome together!
• Multiply the measurement by 70% for breakouts or 44% for breakdowns.
• Ascending triangle breakouts aren’t the only kind of triangle breakouts.
• Because the price was previously in an uptrend, the arrangement suggests that the price will breakout higher.

Triangle patterns come in three varieties – ascending, descending, and symmetrical – although all three types of triangles are interpreted similarly. In an ascending triangle, the top of the triangle bumps up against overhead resistance (the horizontal red line),
and the bottom of the triangle slopes upward following another red trendline. Price bounces between two converging trendlines, the top one is horizontal and the bottom one slopes upward. You can either look to go long on the break of the highs, or you can look to get long when the market breaks and close above the resistance level. The triangle chart pattern is generally considered a bullish pattern. Some clues can be obtained by checking the accompanying trading volume.

What is an Ascending Triangle Pattern

The support trend line continues to close the channel until the resistance price level breaks on heavy volume to resume the prior trend again. The ascending triangle chart pattern is generally interpreted as a bullish continuation pattern when it forms in a controlling uptrend. Technical traders like the fact that the pattern provides clear trading signals, including market entry points that offer limited risk.

It returns to retest the pattern’s resistance trendline as support in September for further bullish confirmation, resuming its uptrend. Finally, always place a stop loss when trading an ascending triangle pattern. Even a breakout that is accompanied by high volume may fail, either resuming the ascending triangle pattern or initiating a reversal. When trading ascending triangle patterns, there are a few important things to keep in mind.

What is an Ascending Triangle?

These include comprehensive descriptions and images so that you can recognize important chart patterns scenarios and become a better trader. This is the reason why the ascending triangle pattern is a favorite among many stock traders. For those who understand this chart pattern and trade it correctly, it’s a trading strategy that can result in big profits. It is one of the three important triangle patterns defined by classical technical analysis. The other two being the descending triangle and the symmetrical triangle. Ascending triangles are continuation patterns because the price usually breaks in the direction it was going before the pattern.

• There isn’t enough bullish momentum to break through an area of resistance, but bulls are buying up the stock on each dip.
• So, a suspected ascending triangle should come after a stock has experienced significant gains before meeting an area of resistance.
• They can also assist a trader in spotting a market reversal.
• If you’re about to start day trading, you might be thinking of ways to maximize profits and minimize losses — this is the goal of any day trader.
• If it appears during a long-term uptrend, it is usually taken as a signal of a possible market reversal and trend change.

In essence, this trading method involves entering a position when the price moves out of a defined range. As a continuation pattern, naturally, we need a preceding trend. In the case of the ascending triangle, which is a bullish pattern, we need to have a prior uptrend. In this case, we apply the same trading rules (entry and exit) as we would with the ascending triangle pattern within an uptrend.

This will give you the ideal target for this continuation pattern. The expected price movement of the breakout is equal to the price difference at the widest part of the ascending triangle pattern. You can measure the distance between the resistance area and the lowest low at the start of the pattern and add that to the resistance area to calculate a profit target rising triangle pattern for the trade. Volume tends to be stronger during trending periods than during consolidation periods. A triangle is a type of consolidation, and therefore volume tends to contract during an ascending triangle. As mentioned, traders look for volume to increase on a breakout, as this helps confirm the price is likely to keep heading in the breakout direction.

When this happens, you will have higher chances of seeing a major breakout. In most cases, it happens before a major information is released. I think using StocksToTrade every day is one of the best things that you can do to help your trading. There are tons of features, including beautiful charts, built-in scans, indicators, and so much more. Ascending triangle breakouts aren’t the only kind of triangle breakouts. No breakout is perfect, so set a stop loss at that highest low before the breakout.

How Long Can You Hold a Short Position?

Bullish continuation patterns can assume different forms – triangles, flags, pennants etc. The ascending triangle is one of the most common formations in this area, as it practically consists of two converging trend lines. As a continuation pattern, the ascending triangle is based on the idea that the likelihood of the trend continuing in the same direction is higher than the chance of a reversal taking place.

Ascending triangle patterns are bullish, meaning that they indicate that a security’s price is likely to climb higher as the pattern completes itself. The first trendline is flat along the top of the triangle and acts as a resistance point which—after price successfully breaks above it—signals the resumption or beginning of an uptrend. The second trendline—the bottom line of the triangle that shows price support—is a line of ascension formed by a series of higher lows. It is this configuration formed by higher lows that forms the triangle and gives it a bullish characterization. The basic interpretation is that the pattern reveals that each time sellers attempt to push prices lower, they are increasingly less successful.