ASCENDING TRIANGLE PATTERN – Part 1: Formation

Ascending Triangle is a bullish pattern that normally forms in the midst of an uptrend as a continuation / consolidation pattern.
However, sometimes this pattern may also be found at the bottom of a downtrend, signaling a potential reversal of trend.

The Formation of Ascending Triangle



Ascending Triangle has a flat / horizontal upper line and an ascending (upward sloping) lower line, forming a pattern that looks like a flat-top triangle.
In this case, the horizontal upper line acts as resistance, whereas the rising lower line as support.

This pattern occurs because the highs (peaks) are maintaining at about the same price levels, whereas the lows (troughs) are moving progressively higher.
As the range between the peaks and troughs are narrowing, the upper & lower lines converge at the "Apex", which is located at the right of the triangle.

The completion of the pattern occurs when prices break out through the horizontal upper line before finishing the apex of the triangle.

This pattern is usually considered as bullish pattern.
The progressively higher lows that form the ascending lower line indicate increased buying pressures, which give the Ascending Triangle pattern a bullish bias.

The pattern implies that buyers and sellers are in a period where they are still hesitant about where the market is heading. Nevertheless, buyers seem to be more aggressive than sellers, as the lows gradually get higher, while the highs are always holding about the same level. In the end, the buyers find enough conviction to break out to the upside with great force.

Therefore, a triangle pattern may sometimes be associated with a “coil”.
A “coil” needs to recoil (contract) in order to build up enough potential energy for its next expansion.

Continue to Part 2: Important Characteristics of Ascending Triangle pattern.

To read about other chart patterns, go to: Learning Charts Patterns

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* Option Greeks
* Getting Started Trading