Ascending Triangle Pattern.

Have you ever observed birds in a cage? When these cute little birds are caged there’s a limit to how high they can fly. But as soon as you release them do you think they will fly till that same height? No! They will go ahead and fly as far and as high as possible. Well, the pattern that we are about to discuss in today’s blog tells the same story. The Ascending Triangle is like a cage in which price has been consolidating and trying to go beyond the resistance to continue the uptrend. Intriguing, isn’t it? So, grab your TA glasses, and let’s learn more about this pattern.

What is an Ascending Triangle Pattern?

How is it formed?

This pattern is formed with two lines. The first one is the resistance level from where the price keeps rebounding. The second line is formed by joining the higher lows in the price movement, making it an ascending (Upward sloping) line. This complete formation appears to be like a triangle and hence, it is called as Ascending Triangle pattern. Now, you will say, mam in real life the resistance level won’t be as perfect as this one. For that remember, a minimum of two touchpoints are needed to make the resistance line and ascending line valid.

What does it tell you?

What can be an ideal entry, price target, and stop-loss?

An ideal entry in this pattern can be at the breakout candle. The price target is calculated by taking the distance of the vertical line of the triangle and then adding it to the breakout candle. Stop-loss can be placed at the recent low.

Example

Below is the weekly chart of Larsen & Toubro forming an Ascending triangle pattern between 18th May 2009 till 7th June 2010. The resistance level is between 640-650, being tested 5 times (marked with a tick) The ascending trendline was making higher lows and tested this level thrice (marked with a tick) before it gave a breakout with above 3-week average volume. Post that the price moved in the previously existing uptrend for a while. The price target was around 850 which was achieved around 1St November 2010 (marked with a tick).

Bottom Line

Ascending Triangle is easy to identify. However, one should be mindful of false breakouts and/or longer consolidation duration. Hence, it is the best practice to get multiple confirmations from other indicators like MACD, RSI, etc. before entering into a position. If technical analysis intrigues you, make sure you click on the link to check out my course where I have explained more such patterns, indicators, and strategies in the most simplified way. Until next time!