Ascending Triangle Pattern
Finding an ascending triangle in chart of daily price data is simple, perhaps too simple.
Hence its name, the price swings in a rising direction among two converging trendlines, which the apex of triangle forms at the end of it.
The horizontal line at the top and the sloping up one at the bottom go through an intersection area.
Oftentimes, the break out of price happens nearly two-thirds of the horizontal line which is taken as a base of triangle.
From the technical analysis point of view, ascending triangles are categorized in continuous patterns. It means the possibility of an up breakout in a bullish trend is more likely to happen than a down side breakout. The opposite situation accrues when the prior bearish trend enters an ascending triangle, follows continues manner, and finally leaves the pattern by a down breakout.
1. Appearance: General shape of ascending triangle is similar to a right-angle triangle with a resistance level as a base side and an up-trendline as a hypotenuse.
2. Trendline: One resistance level at the top and an upward trend line on the bottom side, is the main objective appearance of ascending pattern. As it goes ahead, these two trendlines become closer until they intersect and the apex of triangle forms. Don't forget that the resistance level is not always being found exactly horizontal.
3. Pattern Category: The overall behavior of the triangles pattern continues, which means the price may exit the pattern in the same direction as it entered.
4. Breakout:
Expectation: In a triangle pattern, most of the time, price perseveres in the previous direction. If an uptrend enters a triangle pattern, it is more likely to exit with an up break out, and vice versa. ( a downward break out is expected in a downtrend). When the price jumps over any bounded trendlines, the breakout happens. As discussed above, the price may cross either resistance or trendline. The next price target is set as the height of the triangle from the breakout value. Depending on being a bullish or bearish trend, this can be higher or lower than the pattern.
Failure: Noting is absolute, especially in the market! Although it is expected to show a continuous behavior, the price may bring a reversal manner and that's where the pattern seems to fail.
USDEUR, Daily Chart (July 2021- April 2022)