Ascending triangle pattern

An ascending triangle is a chart pattern with two boundaries: a horizontal resistance that price tests several times, and a rising trend line that connects higher lows. The range between them narrows until price leaves the triangle.

It most often appears as a continuation pattern inside an uptrend – a pause before the next leg up. It can also form at the end of a decline, where a break above the flat top is read as a reversal.

On Charts the trend line tool draws both sides, and Replay shows how past triangles broke candle by candle. What to check:

• Flat resistance – at least two highs at about the same level. The more times price stops there, the clearer the level.
• Rising lows – at least two lows, each higher than the one before, connected by a rising trend line.
• Price fills the triangle – it moves between the two lines several times. One spike and a drift is not a triangle.
• Volume – usually declines as the range narrows and rises on the breakout.
• Breakout – a candle close above the resistance. A wick through the level that closes back inside does not count.

The breakout is a candle close above the flat resistance. After it the old resistance often acts as support, and price may come back to test it before moving on.

The target is the height of the triangle: the vertical distance from the resistance down to the rising trend line, measured at the widest part and added to the breakout level. With resistance at 130 and the first low at 112, the triangle is 18 points tall and the target is 130 + 18 = 148.

Breakouts that come well before the apex are treated as stronger. When price drifts all the way into the tip, the range is too small to say much.

• Entry – on the candle close above the resistance, or on a retest of the broken resistance from above.
• Stop – below the last higher low inside the triangle. A stop just below the broken resistance is tighter, but a deeper retest takes it out more often.
• Target – the height of the triangle added to the breakout level. The nearest resistance above is a common place to take part of the profit.
• Failure – a close back inside the triangle and then below the rising trend line cancels the trade idea.

A triangle pattern is a range bounded by two converging lines. There are three main types, and they differ in which side is flat.

• Ascending triangle – flat resistance, rising lows. Usually read as bullish.
• Descending triangle – flat support, falling highs. Usually read as bearish.
• Symmetrical triangle – falling highs and rising lows, neither side flat. It shows no bias on its own. Traders take the direction of the breakout, which often follows the trend that came before the triangle.
• The target is measured the same way for all three: the height of the triangle at its widest part, projected from the breakout.

Both have rising lows. In an ascending triangle the highs stop at one level. In a rising wedge the highs rise as well, only more slowly than the lows, and the pattern is read as bearish. Check the upper line: flat means triangle, sloping up means wedge.

• Buying before the breakout – resistance that has held several times can hold again, and a close below the rising lows turns the pattern down.
• Trading a wick – a spike above the resistance that closes back below it is a common trap. Wait for the close.
• Uneven resistance – if the highs are clearly rising or falling, the pattern is a wedge or a symmetrical triangle and is read differently.
• Assuming the direction – an ascending triangle can break down. A close below the rising trend line is a signal in its own right.
• Measuring the height at the tip – the target uses the widest part of the triangle, at its left side.