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Ascending Descending Triangle Pattern

Basic Chart Patterns : Ascending and Descending Triangle

Ascending & Descending Triangle Chart Pattern

Welcome to post #4 of the Basic Chart Patterns Series (2018) – Ascending & Descending Triangle Chart Pattern

In this post, you will learn about the Ascending & Descending Triangle Chart Pattern and the best ways to trade these patterns.

Ascending Descending Triangle Pattern

Ascending Triangle Chart Pattern

 

Ascending Triangle Definition

 

The ascending triangle is a price pattern made up of two trendlines. A flat upper trendline which acts as the level of resistance and a lower trendline that joins higher lows in an upward slope.

 

How to identify Ascending Triangle

 

The pattern can indicate that the bulls are gaining control with the higher lows and weakening resistance leading to a potential breakout to the upside.

 

Ascending Triangle Trading Strategy

There are two common ways with which you can trade the ascending triangle.

Now that we know what the ascending triangle looks like. Let us look at two ways of trading the pattern.

 

Method 1

Ascending Triangle Trading Strategy Method 1

 

The first way a trader can look to take advantage of the pattern is to wait for the price to break out above resistance and then go long.

It is always a good idea to wait for the candle to close above the trendline after price breaks out. As this confirms that the bulls are in control.

The Stop-Loss can be placed below the upward sloping trendline.

To measure the profit objective. Measure the height of the back of the triangle and extend this measurement to the upside where price broke out from the trend line.

 

Method 2

Ascending Triangle Trading Strategy Method 2

 

The second way to trade this pattern is more conservative.

The method is to wait for the price to break out of the triangle as previously shown. But instead of entering directly after you break out you wait for the price to pull back to the origin of the breakout.

In other words, you are looking for broken resistance to become support.

The Stop-Loss would be smaller when trading this method as it would go below the new support level.

The profit objective is calculated in exactly the same way as the first method. By measuring the height of the back of the triangle and extending this measurement from the breakout point where price broke the trend line.

 

Descending Triangle Chart Pattern

 

Descending Triangle Definition

 

The descending triangle is a price pattern made up of two trendlines. A flat lower trendline which acts as the support and an upper downsloping trendline which acts as resistance.

 

How to identify Descending Triangle

 

The pattern can indicate that the bears are gaining control with lower highs and weakening support leading to a possible breakout to the downside.

 

Descending Triangle Trading Strategy

Now that you know what the descending triangle looks like. Let us look at two ways of trading the pattern.

Method 1

Descending Triangle Trading Strategy Method 1

 

The first way a trader can look to take advantage of the pattern is to wait for the price to break below the lower trend line and then go short.

It is always a good idea to wait for the candle to close below the lower trendline after price breaks out. As this confirms that the bears are in control.

The Stop-Loss can be placed above the down sloping trend line.

The profit objective can be measured by taking the height of the back of the triangle. And extending this measurement to the downside where price broke out from the lower trend line.

 

Method 2

Descending Triangle Trading Strategy Method 2

 

The second way to break this pattern is to wait for the price to break out of the triangle as previously shown.

But instead of entering directly after the breakout you wait for the price to pull back and retest the lower level of the triangle.

In other words you are looking for broken support to become resistance.

The Stop-Loss would be smaller when trading this way as it would go above the new resistance level.

The profit objective is calculated in exactly the same ways the first method. By measuring the height of the back of the triangle and extending this measurement from the breakout point where price broke the lower trendline.

 

Conclusion: Ascending & Descending Triangle Chart Pattern

This is all for the fourth post in the series of basic chart patterns. Hope this post was helpful for you. In case you have any queries/suggestions feel free to comment below.

 

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