Key Takeaways
The trendlines of a triangle need to run along at least two swing highs and two swing lows.
Ascending triangles are considered a continuation pattern, as the price will typically breakout of the triangle in the price direction prevailing before the triangle. Although, this won't always occur. A breakout in any direction is noteworthy.
What Does the Ascending Triangle Tell You?
An ascending triangle is generally considered to be a continuation pattern, meaning that the pattern is significant if it occurs within an uptrend or downtrend. Once the breakout from the triangle occurs, traders tend to aggressively buy or sell the asset depending on which direction the price broke out.
Increasing volume helps to confirm the breakout, as it shows rising interest as the price moves out of the pattern.
A minimum of two swing highs and two swing lows are required to form the ascending triangle's trendlines. But, a greater number of trendline touches tends to produce more reliable trading results. Since the trendlines are converging on one another, if the price continues to move within a triangle for multiple swings the price action becomes more coiled, likely leading to a stronger eventual breakout.
Volume tends to be stronger during trending periods than during consolidation periods. A triangle is a type of consolidation, and therefore volume tends to contract during an ascending triangle. As mentioned, traders look for volume to increase on a breakout, as this helps confirm the price is likely to keep heading in the breakout direction. If the price breaks out on low volume, that is a warning sign that the breakout lacks strength. This could mean the price will move back into the pattern.
The trendlines of a triangle need to run along at least two swing highs and two swing lows.
Ascending triangles are considered a continuation pattern, as the price will typically breakout of the triangle in the price direction prevailing before the triangle. Although, this won't always occur. A breakout in any direction is noteworthy.
What Does the Ascending Triangle Tell You?
An ascending triangle is generally considered to be a continuation pattern, meaning that the pattern is significant if it occurs within an uptrend or downtrend. Once the breakout from the triangle occurs, traders tend to aggressively buy or sell the asset depending on which direction the price broke out.
Increasing volume helps to confirm the breakout, as it shows rising interest as the price moves out of the pattern.
A minimum of two swing highs and two swing lows are required to form the ascending triangle's trendlines. But, a greater number of trendline touches tends to produce more reliable trading results. Since the trendlines are converging on one another, if the price continues to move within a triangle for multiple swings the price action becomes more coiled, likely leading to a stronger eventual breakout.
Volume tends to be stronger during trending periods than during consolidation periods. A triangle is a type of consolidation, and therefore volume tends to contract during an ascending triangle. As mentioned, traders look for volume to increase on a breakout, as this helps confirm the price is likely to keep heading in the breakout direction. If the price breaks out on low volume, that is a warning sign that the breakout lacks strength. This could mean the price will move back into the pattern.
