Ascending Triangle What is an ascending triangle? An ascending triangle is a technical-analysis chart pattern formed by:
A horizontal resistance line drawn through at least two swing highs.
A rising support trendline drawn through at least two higher swing lows. Explore More Resources
The two lines converge to form a triangle. The pattern is most commonly seen as a continuation pattern: price often breaks out in the direction of the prior trend, although breakouts can occur either way. Key characteristics and signals
* Minimum formation: two swing highs and two swing lows for the trendlines; more touches increase reliability.
* Volume typically contracts during the consolidation phase and should expand on a valid breakout.
* False breakouts are common—look for confirming volume or follow-through.
* Breakout directions:
* Upside breakout above the horizontal resistance → bullish signal.
* Downside breakdown below the rising trendline → bearish signal.
Trading rules Entry:
Enter long when price closes (or otherwise confirms) above the horizontal resistance.
Enter short when price closes below the rising support trendline. Explore More Resources
Stop loss:
Place a stop just outside the opposite side of the triangle (e.g., if long, stop just below the lower trendline). Profit target:
Measure the height of the triangle at its thickest point (vertical distance between resistance and support).
* Add (for upside breakouts) or subtract (for downside breakdowns) that distance from the breakout price to estimate a target. Explore More Resources
Example:
Triangle height = $5. Upside breakout at $50 → target ≈ $55. Downside breakdown at $50 → target ≈ $45. Risk/reward considerations:
Wider triangles produce larger stops but also larger targets; narrowing triangles shrink the stop distance while target is still based on the triangle’s maximum height, affecting risk/reward.
* Use additional confirmation (volume, momentum indicators) to reduce the chance of false signals. Explore More Resources
Psychology behind the pattern
* The horizontal upper line marks a persistent supply/resistance level where sellers step in.
* The rising lower trendline shows buyers entering earlier and at higher prices, reflecting increasing buying resolve.
* As the triangle tightens, buyers and sellers converge toward a decisive breakout point where momentum typically resolves in one direction.
How it differs from the descending triangle
* Ascending triangle: horizontal resistance on top + rising support underneath.
* Descending triangle: horizontal support on bottom + descending resistance on top.
Both are typically continuation patterns, but their visual orientation and underlying supply/demand dynamics are opposite.
Limitations and risks
* False breakouts are common; price may briefly exit the triangle and then reverse back inside.
* Profit targets are estimates—price can overshoot or fail to reach them.
* Pattern lines may need frequent redrawing as price tests and slightly breaches trendlines without conviction.
Practical tips
* Require a breakout confirmation (e.g., close beyond the line, increased volume).
* Combine with other tools (trend context, indicators, support/resistance levels) for better probability.
* Adjust position size to account for the stop distance determined by the triangle.
Bottom line The ascending triangle provides a clear framework for entries, stops, and targets by combining a horizontal resistance line with a rising support trendline. It is commonly viewed as a continuation pattern, but traders should confirm breakouts (preferably with rising volume) and be mindful of false breakouts and position sizing.