Ascending Triangle Forex
Ascending triangle forex is one of the most well-known patterns.
Investors use various tools to assess the market direction, including technical indicators and chart patterns. Triangles are one of the available numerous chart patterns.
In a nutshell, you make money from losing traders‘ stop orders, which is why it works. This is clearly a terrific chart pattern if traded correctly.
As a result, I’ve created a complete tutorial on trading the Ascending Triangle.
Finding an ascending triangle pattern on forex charts?
Now, if you trade the FX markets on your own, you’re probably not going to be looking at charts with triangles already drawn on them. After all, if everyone in the market was looking at the identical cheat sheets, you’d have no advantage!
So, let’s learn how to spot an ascending triangle so you can use it in your forex trading strategy. Then, for ease of reference, we may create a step-by-step tutorial:
But, first, wait for the market to revert to its positive trend.
When the market is rising, the rising triangle is advantageous. However, even if you spot it in your squiggly lines, it may not react as expected if the market falls.
The market is consolidating
Ascending triangles are more likely to emerge while the market is consolidating.
Keep an eye out for the rising lower trendline
Find security whose lows are constantly climbing. This suggests that buyers are driving up the price.
Find the flat upper trendline
Then you’ll need a steady resistance line. This means that there will be a tipping point.
Allow the current trend to continue
Your rising triangle is confirmed when the price breaks through the upper trendline.
Ascending triangles can appear as reversal patterns after a downturn, although they are more often continuation patterns.
Ascending triangles are bullish patterns that signal accumulations. The Ascending Triangle is nearing resistance with a succession of higher lows.
This is an indication of power for three reasons:
- Buyers are willing to pay a higher price.
- There is no compulsion to sell.
- Buy stop orders are grouped together above resistance.
Let me clarify.
Buyers are willing to pay higher costs
Here’s how it works:
Rising lows will not create resistance if buyers are reluctant to pay more amazing prices.
The market’s ability to generate a series of higher lows demonstrates demand even as prices climb.
No selling pressure
If there is considerable selling pressure, the price should not be able to remain at resistance for long. As a result, it should plummet quickly.
Even at an “attractive” level, if the price continues around resistance, it signals a lack of selling pressure.
Buy stop orders are grouped together above the resistance
That isn’t the only difference. Because of the price retests Resistance, more traders will attempt to short the market with a stop loss above resistance.
But what if the market keeps rising?
As a result, these purchase stop orders will be implemented, resulting in yet another price increase.
Using the ascending triangle pattern
Because the ascending triangle is a positive indication, the supporting ascension line should be constantly watched because it indicates that bears are gradually exiting the market. Bulls (or buyers) can then push security prices over the resistance level depicted by the flat top line of the triangle.
As a trader, you should be wary about starting trades before prices break above the resistance line, as the pattern may fail to form ultimately or be disrupted by a move to the downside. However, the danger of waiting for a verified breakthrough is lower. Buyers can then set sensible stop-loss orders below the low of the triangle formation.
How to use an ascending triangle?
While many traders know how to use an ascending triangle, many are unaware that the pattern has a built-in profit calculating strategy.
It’s a simple strategy with only two stages to determine how much profit a trader should strive for or may expect following the breakout in this pattern, indicating that the trend must continue.
The first of the two steps is to calculate the distance between the lowest point on the bottom trendline and the flat top line at the start of the pattern. The second stage measures the potential profit from the break-even point over the same distance.
The trader might use this approach to seek for-profit and properly plan his trading.
Avoid making this common mistake while trading the Ascending Triangle chart pattern (that most traders never realise)
Most trading books will tell you to sell when the price is at resistance, right?
But here’s the catch.
Because the price must be observed as it approaches a resistance level, not every resistance level is acceptable for shorting.
When to enter the trade when trading ascending triangle?
Before I show you how to trade ascending triangles, it’s a good idea to understand when it’s optimal to enter a trade when trading the Ascending Triangle chart pattern.
There are three possibilities:
- Stop order
- Break and Close
- Trendline retest
Let us discuss these.
This strategy goes long when the price trades above the highs of the Ascending Triangle.
You must place a buy stop order and will be declared a member once the price trades above the highs.
If the breakout is valid, this is one of the most attractive opportunities to enter. The downside is that this might be a false breakout.
Break and Close
This method is the same as the last one.
The primary difference is that you wait for the price to break through and close above the highs. It decreases the possibility of a false breakout.
If the momentum is high, you’ll have to enter your trade at a considerably higher price.
Retest of a trendline
If you’re a competent trader, you could even be able to enter the breakout before it occurs. How long when the price retests the trendline (of the Ascending Triangle).
This is fantastic, isn’t it?
So now, in the next part, we’ll learn about proper stop-loss, which is the main thing when entering the trade.
Proper Stop Loss
The principle is the same whether you trade ascending triangles, breakouts, or other methods. The stop loss should be established so that the trading arrangement is null and void if exceeded. Another way, when the market hits the stop loss, you will know you were wrong.
Let us now go to the winning exits. You should think about two approaches right now. The first is the trailing stop loss, and the second is the price estimate. After that, we’ll go through each one in further detail.
The Trailing Stop Loss
Because you don’t know how long a trend will persist, you should trail your stop loss and “lock-in” profits whenever the market advances in your favour. You might do this using a moving average indicator.
You may use a 50-period moving average to track a stop loss when you are long. However, to be more specific, You must keep your position until the market falls below the 50-period moving average.
The Price Projection
A classic charting method is also utilised to anticipate where the price will be. You might use it to ascend chart patterns.
There are two ways to make the ascending triangle pattern function. First, measure the width of the present ascending triangle from high to low. Two, double the amount on the price prediction’s breakthrough level.
How to trade the ascending triangle?
While trading the ascending triangle, traders must notice the rise. As the forex candlesticks begin to consolidate, the rising triangle appears. Once the triangle has formed, traders may utilise the measuring technique to forecast the breakout.
Following a strong break-over resistance, traders can open a long position with a stop at the most recent swing low and a take profit goal determined by the measurement technique.
There are a few things to keep in mind while trading with the Ascending Triangle Pattern:
- The preceding trend should continue to be rising.
- A horizontal line should act as a resistance level, with prices making higher lows.
- After breaking over the resistance level, prices should continue to increase.
- A length entry
- The stop loss is set under the support line.
- The profit objective is located the same distance above the triangle’s rear.
Now I’m going to teach you a variety of trading strategies.
Trading techniques using the ascending triangle pattern
Several trading strategies are based on the ascending triangle pattern. Although this pattern is evident, there are numerous ways to cope with it. The steps are as follows:
False ascending triangle
At the outset of this piece, we indicated that the ascending triangle suggests a favourable price trend movement. This legislation, however, is not always applicable.
For example, if the bulls cannot raise the price, the market may turn in the opposite direction. This method shows how to deal with an improper ascending triangle:
It is advisable to get pattern approval first. Never open a position before there has been a breakthrough. For instance, if the price breaks through the support line of an ascending triangle pattern, you should enter a sell trade.
Set a profit level at this time. To determine the distance, simply count the number of pips from the beginning of the triangles to the highs. The precise number of pips may be selected starting from high at the triangle’s base.
Stop-loss orders can be set a few pips above the support line. Generally, you should change this quantity by 3 to 10 pips, depending on the time interval.
Patterns arise in a variety of ways. The ascending triangle has smoother upper highs, whereas the descending triangle has rougher lower highs. The ascending triangle’s floor features a slope of higher lows, but the bottom half of the descending triangle seems smooth.
True ascending triangle
The rising triangle pattern index is the most often used and effective trading method.
First, you must wait for the rising triangular pattern to shape.
Expect a breakthrough. The price should end at the resistance level. Then you must open a long position.
To establish the profitability level, count the number of pips from the bottom of the triangle to the horizontal resistance line.
Each technical analysis methodology has pros and downsides in financial markets. Let us examine the advantages and disadvantages of Ascending Triangle.
Pros of ascending triangle
- Simple to recognise the pattern
- Because this is an intermediate-term pattern, traders can trade inside it but should limit transactions to the trend’s direction.
- Based on the maximum height of the rising triangle, it generates a fundamental goal standard.
- In contrast to other chart patterns that indicate a trend reversal, this pattern is a continuation pattern.
- When applying the measurement approach, profit objectives are evident.
- It can be found at any moment.
Cons of ascending triangle
- False breakouts are a possibility (traders need to manage risk accordingly)
- There is always the risk that the price will remain sideways for an extended time or perhaps fall.
- It is unusual to see it in perfect configuration.
- The placement of stop-loss orders is not adequately defined.
- Day traders and scalpers will benefit more from this strategy.
- It may generate false signals.
- It doesn’t frequently occur on the chart.
One of the most fundamental and practical patterns is the ascending triangle, which capitalises on consumer supply and demand mismatches.
With the ascending triangle, you may be able to spot the trade opportunity before it occurs. As a result, understanding the ascending triangle pattern may be a valuable strategy for identifying profitable trades.
Table of Contents
Heinrich is a forex and CFD enthusiast with a passion for writing good informative quality content. He strives to showcase the best forex brokers in Africa. Join him on his Journey!
Content Writer | Market Analyst
Symmetrical Triangle Pattern
[top_three_brokers] According to the chart pattern analysis, a symmetrical triangle pattern is formed when the…
Inside Bar Candlestick
[top_three_brokers] The inside bar candlestick pattern doesn't appear very often. So what's the reason for…
[top_three_brokers] Have you ever seen a stock chart that looked like a flag? Chances are,…
Basics of Forex Trading
[top_three_brokers] In this day and age, you've almost definitely heard of the basics of forex trading. Whether…
Avatrade Vs eToro
[top_three_brokers] What do you choose between AvaTrade and eToro, the broker you are looking for?…
Is Forex Trading Haram?
[top_three_brokers] Is forex trading haram or halal? Forex trading is yet both halal and haram,…
Micro Account Forex
[top_three_brokers] Do you know what micro account forex is? Given the tough competition these days,…
Forex Buy and Sell Explained
[top_three_brokers] When it comes to the concept of forex buy and sell explained, traders have…
[top_three_brokers] Standard & Poor's 500, or SP 500, is an index comprising 500 of the…
Evening Star Pattern
[top_three_brokers] The evening star pattern is a candlestick pattern that appears at the end of…