What is an Ascending Triangle?

The ascending triangle is consolidation pattern which points out that the market is about to trade higher, thus it is regarded as the bullish structure. It also belong to the “continuation pattern” category as it is typically formed during an uptrend, but this isn’t always the case. Regardless of the breakout direction, this formations are bullish patterns that signify accumulation.

For an Ascending Triangle formation, there should be at least two highs across the horizontal line and two lows along the lower ascending trend line (see photo above). The price breaks the horizontal resistance as it move higher.

Priorly, an increase in volume usually happens during trending periods and this is a good indicator that the breakout is likely to happen. An increase in volume also helps traders spot the price breakout direction.

If the price breakout occurs on low volume, it means that the price doesn’t have enough momentum to keep going in the same direction and it may retrace lower, hence creating the so-called false breakout.

The correct way to trade it is to wait to make the move once the breakout happens. If the breakout occurs above the pattern, we take a long a position. If the price breaks out to the downside, a short trade is taken.