The Ascending Triangle
posted under
Philosophy of Technical Analysis
by ceecabolos
The ascending and descending triangles are variations of the symmetrical, but have different forecasting implications. Figures 6.3a and b show examples of an ascending triangle. Notice that the upper trendline is flat, while the lower line is rising. This pattern indicates that buyers are more aggressive than sellers. It is considered a bullish pattern and is usually resolved with a breakout to the upside.
Both the ascending and descending triangles differ from the symmetrical in a very important sense. No matter where in the trend structure the ascending or descending triangles appear, they have very definite forecasting implications. The ascending triangle is bullish and the descending triangle is bearish. The symmetrical triangle, by contrast, is inherently a neutral pattern. This does not mean, however, that the symmetrical triangle does not have forecasting value. On the contrary, because the symmetrical .triangle is a continuation pattern, the analyst must simply look to see the direction of the previous trend and then make the assumption that the previous trend will continue.
Let's get back to the ascending triangle. As already stated, more often than not, the ascending triangle is bullish. The bullish breakout is signaled by a decisive closing above the flat upper trendline. As in the case of all valid upside breakouts, volume should see a noticeable increase on the breakout. A return move back to the support line (the flat upper line) is not unusual and should take place on light volume.
Measuring Technique
The measuring technique for the ascending triangle is relatively simple. Simply measure the height of the pattern at its widest
point and project that vertical distance from the breakout point. This is just another example of using the volatility of a price pattern to determine a minimum price objective.The Ascending Triangle as a BottomWhile the ascending triangle most often appears in an uptrend and is considered a continuation pattern, it sometimes appears as a bottoming pattern. It is not unusual toward the end of a downtrend to see an ascending triangle develop. However, even in this situation, the interpretation of the pattern is bullish. The breaking of the upper line signals completion of the base and is considered a bullish signal. Both the ascending and descending triangles are sometimes also referred to as right angle triangles
Both the ascending and descending triangles differ from the symmetrical in a very important sense. No matter where in the trend structure the ascending or descending triangles appear, they have very definite forecasting implications. The ascending triangle is bullish and the descending triangle is bearish. The symmetrical triangle, by contrast, is inherently a neutral pattern. This does not mean, however, that the symmetrical triangle does not have forecasting value. On the contrary, because the symmetrical .triangle is a continuation pattern, the analyst must simply look to see the direction of the previous trend and then make the assumption that the previous trend will continue.
Let's get back to the ascending triangle. As already stated, more often than not, the ascending triangle is bullish. The bullish breakout is signaled by a decisive closing above the flat upper trendline. As in the case of all valid upside breakouts, volume should see a noticeable increase on the breakout. A return move back to the support line (the flat upper line) is not unusual and should take place on light volume.
Measuring Technique
The measuring technique for the ascending triangle is relatively simple. Simply measure the height of the pattern at its widest
point and project that vertical distance from the breakout point. This is just another example of using the volatility of a price pattern to determine a minimum price objective.The Ascending Triangle as a BottomWhile the ascending triangle most often appears in an uptrend and is considered a continuation pattern, it sometimes appears as a bottoming pattern. It is not unusual toward the end of a downtrend to see an ascending triangle develop. However, even in this situation, the interpretation of the pattern is bullish. The breaking of the upper line signals completion of the base and is considered a bullish signal. Both the ascending and descending triangles are sometimes also referred to as right angle triangles
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