We have explained Ascending Triangle Trading Strategy with example and limitation. The horizontal line is drawn along the swing high and the rising trendline is drawn along the swing low. There are two lines that will form a triangle. An ascending triangle is a chart pattern used in technical analysis. Triangle is created by price move. The ascending triangle method is easy to capture all breakouts inside a trend. To confirm the breakout we use the RSI tool which is a momentum-based indicator. The price will contract inside the pattern at point bulls/bears that must win. So by using the RSI indicator we determine in advance who is going to win this battle.
How to trade the ascending triangle : At the time of trading, these pattern traders need to identify the uptrend. It appears as the forex candlesticks start to consolidate. The measuring technique is applied when the triangle formed. After viewing the above resistance the traders will enter in a long position setting a stop with a recent swing low. It will take profit target in line with the measuring technique.
The ascending triangle is called as a tradable and provides an entry point. It is a stop-loss level. The trendlines of a triangle are ruined on swing highs and two swing lows. Long trade used if the price break arrives above the top. The short trade is taken if the price breaks below the lower trendline. The profit target is then calculated by using the height of the triangle as a thick point from the breakout point. The breakout will occur when the trader tends to buy/ sell of asset depending on the direction of broke out. The increasing volume help to the breakout that shows a rise in interest as the price moves.
view moreThe ascending triangle form at a downtrend and the price continues at the lower breakout. The short entry is formed when the price is broken below the lower trendline. The stop loss is placed above the upper trendline of the pattern. When a pattern narrows the stop loss becomes small as the distance to the breakout point is small. So profit target based on the large part of the pattern.
The descending triangle has a horizontal lower line and the upper trendline is descending. The patterns will rise at the lower trendline and horizontal upper trendline.
The pattern needs to redrawn sometimes as the price edge past the trendlines. It fails to generate momentum in the breakout direction. The ascending triangles will provide a profit target that the target estimates. The price may exceed the target to reach it. The triangles fall under the category of continuation patterns. The triangle shows losing interest in an issue from the buy-side as well as the sell-side the supply line diminished to meet the demand.
The market should be in an uptrend before the ascending triangle that appears. The formation takes place when it enters the consolidation phase. While the market is consolidating the rising trendline is drawn by connecting the lows. It provides further support for a bullish bias. The upper trendline will act as a resistance price. It will approach until the breakout occurs in the pattern.
The ascending triangle formation is a powerful chart pattern that exploits the supply and demand imbalance in the market. Many technical analysts trade the breakout without taking the time to understand what goes behind the scene. We have a perfect head start and see the trading opportunity before it starts. So to recognize patterns can be a valuable tool to identify the profitable trades.
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