The Ascending Triangle Pattern: Trading This Powerful Formation

What is an ascending triangle?

An ascending triangle forms when price creates a flat resistance ceiling at the top while making higher lows that slope upward. The pattern looks like a triangle. Traders watch these formations closely. Breakouts happen. Sometimes up, sometimes down.

Mostly, these patterns suggest continuation. Price often breaks in the same direction it was moving before the triangle appeared. Makes sense, right? Kind of like a pause before continuing the journey.

Traders love ascending triangles. They're practical. Clear entry points. Defined targets. Obvious stop levels. Different from descending triangles, which tell another story entirely.

Key takeaways

• You need at least two swing highs and two swing lows to draw a proper triangle.

• These are typically continuation patterns, but breakouts in either direction matter.

• Go long when price pushes through the top resistance line.

• Go short if price falls through the bottom trend line.

• Stops? Place them on the opposite side of your breakout.

• For targets, measure the triangle's widest point. Project that distance from breakout.

What does the ascending triangle tell you?

The triangle seems to signal "keep going" for the existing trend. It's especially meaningful during established moves up or down. When it breaks, traders jump in.

Volume matters. A lot. Rising volume during breakouts shows growing interest. It's not entirely clear that every breakout will succeed, but volume helps separate the real moves from fakeouts.

You technically need just two points for each line, but more touchpoints? Better pattern. Price bounces between the lines, getting squeezed tighter. The pressure builds.

Inside the triangle, volume typically shrinks. It's like the market's taking a breath. Then—boom—volume should expand on breakout. Low volume breakouts? Suspicious. Watch out.

Trading these is straightforward. Buy upside breaks. Sell downside breaks. Put your stop on the other side. If you buy an upside break, your stop goes below the lower line. Simple.

For profit targets, just measure the triangle's height at its widest part. Add that to an upside breakout price. Subtract from a downside break. A $5 tall triangle means a $5 target from the breakout point.

Wider triangles offer bigger potential rewards. Interesting how as the pattern narrows, your risk decreases while the reward calculation stays based on the original width. Pretty sweet risk setup.