“Ascending Triangles” form when prices attempt to make “higher highs” and “lower lows” suggesting a bullish price trend. The “Ascending triangle” is bound by two trendlines: a horizontal line at the top and an upward slope trend line connecting the lower lows.
“Ascending triangles” form in any market and are quite reliable. The “Triangle” prices must intersect the trend lines at least twice (each) before the pattern is complete. Usually at the third or fourth attempt to trade outside the top trend line results in a breakout. Breakouts occur near the apex of the triangle. This pattern has a high success rate as it meets its target about 75% of the time.
Trade:
Trade a clear breakout of the top trend line. Enter a “long” trade one tick above the high of the breakout bar. Confirm the breakout by volume or other indicators.
Target:
“Ascending triangles” have excellent success in reaching target areas. The usual target would be the depth of the “Triangle”. Measure the distance (depth) between the top trend line and lowest of the upward slope trend line. Add this depth to the breakout point from the top of the trend line. Targets are also set at 50% of depth level for partial exits.
Stop:Place a “stop” order when the price closes below the low of the lower trend line or a major swing low.
Trading Ascending Triangle
Trading Ascending Triangle
The above example shows an “Ascending triangle” from the Russell Emini (ER2) 5 minute chart. On February 01,2007, at around 2.30 pm, after few failed breakout attempts, the price closed outside the upper trend line. A trade is triggered above the high of the breakout bar at 809.6. A “stop” order is placed below the low of the last “swing low” at 808. The depth of the triangle is 4 points. Targets are set for 50% of depth (2 points) at 8 12 and 100% of the depth at 813.