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Ascending Triangle

Ascending triangle is rally to a new high followed by a pull back to an intermediate support level, a second rally to test the first peak followed by a second decline to a level higher than the intermediate term support level and finally a rally to fresh new highs on strong volume.

The technical target is derived by measuring the vertical height of the triangle and applying this length to the new breakout level.

Because of its shape, the Ascending triangle pattern can also be referred to as a right-angle triangle. In contrast to the symmetrical triangle, an ascending triangle has a definitive bullish bias before the actual breakout.

On the ascending triangle, the horizontal line represents overhead supply that prevents the security from moving past a certain level. It is as if a large sell order has been placed at this level and it is taking a number of weeks or months to execute, thus preventing the price from rising further. Even though the price cannot rise past this level, the reaction lows continue to rise. It is these higher lows that indicate increased buying pressure and give the ascending triangle its bullish bias.

Acending Triangle
Ascending Triangle

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  • Top Horizontal Line: At least 2 reaction highs are required to form the top horizontal line.
  • Lower Ascending Trendline: At least two reaction lows are required to form the lower ascending trendline. A more recent reaction low should not be equal to or less than the previous reaction low.
  • Duration: The length of the pattern can range from a few weeks to many months with the average pattern lasting from 1-3 months.
  • Volume: Confirmation is preferred, but it is not necessary. As the pattern develops, volume usually contracts. When the upside breakout occurs, there should be an expansion of volume to confirm the breakout.
  • Return to breakout: Sometimes there will be a return to breakout level (now support) before the move begins in earnest.
  • Target: price projection is found by measuring the widest distance of the pattern and applying it to the resistance breakout.

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