Ascending Triangle Chart Pattern

An Ascending Triangle is formed by a series of higher highs than the preceeding one on the stock chart pattern. It is usually considered bullish and is most often a continuation pattern where the uptrend continues after the pattern is complete but also can be found in a reversal pattern when a downtrend reverses.

Taking a look at the Ascending Triangle stock chart pattern you will have a horizontal line touching the top part of the triangle and a rising bottom line touching the lows of the price, you will notice a few things that help identify this particular pattern:

First of all, when the top price points of the triangle are connected, they appear to form a horizontal line. Also, when connecting the bottom price points of the triangle, these form an upward sloping line, hence the name “Ascending Triangle”.

The horizontal line represents a large overhead supply that is much more than the demand that prevents the stock price from moving upwards beyond a certain level, 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.

As the price enters the top area of the pattern, buying is exhausted and sellers take over, causing the price to move lower.

As the price moves to the low in the pattern, buyers step in and push the price higher once again, overpowering the sellers. Each time sellers step in at the top of the pattern, they do so with less and less conviction which causes the higher lows to be formed as the pattern evolves.

Finally, at the end of the pattern sellers give up and buying takes control causing a breakout to the upside in the majority of instances. As the pattern nears its end point, volume typically decreases until the point of the breakout which is usually a spike in volume.

So the characteristics of an Ascending Triangle are higher consecutive lows with a common high that forms a temporary upper resistance level, or horizontal line when viewing the pattern on a chart.

Keep in mind that just as in any other stock chart pattern, prices will often fluctuate from the pattern boundaries and variations should be expected. Allowing for these fluctuations will lessen the chance of being stopped out on a fakeout. Below is an example of an Ascending Triangle Reversal Chart Pattern:

If you look on Ascending Triangles chart patterns you will be able to see that once the pattern ended and a breakout to the upside occurred, the volume spiked also.

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

 

 

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