Before reading this lesson, you should have previously read through:

The ascending triangle is similar to the symmetrical triangle, except that only one side is sloping.

An ascending triangle pattern is characterised by a usually flat level of resistance at the top with the lower side sloping upwards as the price reaches higher lows. It can signal weakening resistance and an approaching breakout to the upside. These higher lows indicate that the bulls are gaining strength which presents you with a possible buying opportunity. This lesson will show you two ways to trade using ascending triangles.

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Identifying an ascending triangle pattern

The chart below demonstrates what an ascending triangle pattern looks like:

Ascending triangle example 1

You can practice how to draw ascending triangles in the following exercises:

Trading an ascending triangle: method one

One way to trade using an ascending triangle is to enter once the resistance level has been broken and the price starts to move to the upside.

You can place the stop loss below the upwards sloping side of the triangle pattern and measure the profit target by taking the height of the back of the ascending triangle and extending that distance up from the trend line breakout.

The chart below demonstrates where to place the entry (blue), stop loss (red) and take profit levels (green):

usdchfexample

el1 Entry as the price breaks out of the triangle to the upside.
sl2 Stop loss goes just below the slope of the triangle.
tp3 Profit target goes the same distance away as the back of the triangle.

You can practice how to place an entry and exit in the following exercises:

Exercise 1: Where would you put your entry, stop loss and profit target? Show exercise

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Trading an ascending triangle: method two

The second option is to wait for the price to break out of the triangle (breaking through the resistance level), as in the first example and then look to place a buy order on the retest of the previous support line (broken resistance now becomes support).

The stop loss would go below the new support area and the profit target would remain the same as in the first example – the length of the back of the triangle.

The chart below demonstrates the second way you can trade the ascending triangle pattern. It shows the entry, stop loss and take profit levels:


Ascending triangle example3
el1 Long entry
sl2 Stop loss goes below the support line
tp3 Profit target goes the same distance above as the back of the triangle

You can practice where to place an entry and exit in the following exercises:

Exercise 1: Where would you put your entry, stop loss and profit target? Show exercise

Summary

So far, you have learned that …

  • … an ascending triangle pattern is a signal of weakening resistance and a potential upwards move. This presents you with a possible buying opportunity.
  • … you can enter after the resistance level has been broken, either on a breakout or on a retest of the upper line.
  • … you can place the stop loss just below the lower, sloping level.
  • … the take profit level is determined by measuring the distance of the back of the triangle and extending that distance upwards from the entry point.

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