What is the Ascending Triangle?

The Ascending Triangle term is a common technical indicator that is used to calculate the highs and the lows. Basically, a horizontal line is drawn right next to the highs followed by the trendline that’s drawn next to the lows. The combination of these two lines creates a triangle. Investors are often on the lookout for the possible breakouts that create a triangular pattern. These breakouts could take place either on the upside or downside of the chart.

It is extremely important for all kinds of investors to understand the trend patterns before making any important decision. The ascending triangle is a crucial component for identifying the latest Market trends and determining possible future outcomes. This will make it possible for you to make trades that are profitable and successful. Just like other patterns and charts, the ascending triangle or triangle pattern suggest the persistence of the bullish as well as the bearish market. This triangle pattern will also help the investors in identifying market reversal.

How does Ascending Triangle Work?

The ascending triangle is a part of the triangle pattern, along with the descending and symmetrical triangle. As the name suggests, it is based on the bullish market which predicts the potential upside breakout whereas the descending triangle promotes the anticipation of the bearish market. This article focuses on the ascending triangle, which is based on the fact that the stock market is bullish and the price of the stocks, Bonds, derivatives, and other financial instruments is highly likely to increase when the triangle pattern completes.

As mentioned earlier, the ascending triangle features two important trendlines. The initial line runs on top of the triangular pattern and it works as the resistance point. As soon as the price of the security goes above the resistance point, it indicates a possible uptrend that’s highly likely to take place in the near future. Another line is drawn at the bottom of the triangle, and it represents the support point. This line shows the series of lows.

The triangle forms when the lows and highs move. As the prices of the securities increase, it meets the resistance level. Eventually, the prices of the securities fall as the securities are traded. Owing to the fact that the ascending triangle represents the bullish market, the traders must pay attention to the ascension line as it suggests that the bears will leave the market. Note that the ascending triangle is seen as the continuation pattern.

This continuation makes the pattern significant no matter if it’s an uptrend or a downtrend. Based on the price breakout, there is a good chance the investors will trade the securities aggressively. You can easily notice the breakout as it will suggest high interest. The aggressive trading will push the price of the securities out of the pattern. It is important to note that two lows and two highs swings are needed to create the triangle pattern. The more trendline connects to the triangle, the higher the accuracy of the results.