Chart patterns are beneficial for traders in predicting price behavior in technical analysis, and the ascending triangle is one of them. It is one of the most assuredly reliable and widely recognized continuation patterns.
In general, you will see it in conjunction with a trending upward movement, implying that the market is likely to continue its upward trend upon the completion of the pattern.
Eager to explore more about the ascending triangle? Keep reading to uncover what an ascending triangle is and how you can use it in your trading strategy!

The formation of the ascending triangle chart pattern takes place in a bullish market. It acts as a temporary phase for consolidation, after which the price breakout occurs in the existing trend direction. It is one of the top chart patterns in forex trading. 

 This triangle pattern consists of two key components:

• A horizontal resistance line (connecting multiple highs at roughly the same price level)
• An upward-sloping trend line (connecting a series of higher lows)

Together, these lines form a triangle shape where price gets squeezed between buyers pushing the lows higher and sellers holding the resistance level. 

Eventually, the growing buying pressure will become strong enough to cause a breakout above the resistance line.

Traders observe a series of features for the identification of ascending triangle patterns:

1. Trend Direction: Existing uptrend is the most common location for the formation of this ascending triangle pattern (continuation pattern).
2. Resistance Line: It is a flat horizontal line joining similar high points.
3. Support Line: It is a rising trend-line that joins a series of higher lows.
4. Time Frame: Works best in 4-hour, 1-day, and weekly time frames.
5. Volume Behavior: Declines during the formation of the pattern and spikes at breakout.

These features, therefore, will help to determine the differences in ascending triangles from other similar formations, like symmetrical or descending triangles. 

The psychology behind the pattern is quite simple. All it reflects is a market in which the bulls are slowly gaining strength.

 Here’s a step-by-step guide on how it works:

The price rises until it reaches a resistance level, where sellers enter the market. This causes the upward movement to halt, forming a horizontal resistance line. 

Whenever the price drops, buyers push the price back up, leading to higher lows. This suggests that peaks and dips are forming more frequently, rather than buyers waiting for a better price to enter the market.  

As both lines meet, the trading range narrows. The volume can decline at this time, showing temporary indecision in the market.

When the price eventually breaks above the resistance line with rising volume, it confirms the bullish breakout. This indicates a continuation of the upward trend and tends to result in solid follow-through buying.

The ascending triangle pattern trade is based on identifying the forming pattern, confirming the breakout once it is completed, and setting the correct entry and exit levels.

Let’s dissect the average trader’s approach here:

The most common implementation for entry strategies is waiting for a confirmed breakout above the horizontal resistance line.

• Traders mostly go long after a daily candle closes above resistance, accompanied by a spike in volume.
• Conservatives wait for retests of the breakout level before buying in.

A stop loss provides risk management in case this breakout fails.

• A logical stop is just below the last higher low of the ascending triangle.
• Alternatively, traders may place stops below the ascending trend line.

The profit target is calculated mainly by measuring the height of the triangle (the distance between the first high and the first low) and projecting this distance upward from the breakout point.

For instance, if the triangle is 50 pips high, the take-profits after the breakout are usually about 50 pips above the resistance line. The following is an example of one of the trades:

In addition, if you are struggling with forex trading and want to learn the nitty-gritty details about it, check out OnsaFX’s forex trading beginners guide. 

While it is often seen as reliable, the ascending triangle chart pattern is mostly ‘disabled’ by some mistakes. Here are some of the most common mistakes to notice:

Many people jump into the trade before waiting for any confirmation, which “surprises” them with false breakouts most of the time. Therefore, you shouldn’t jump into the trade if you see any breakout with lower volume.

There is also a chance that the breakout may not be sustained well, especially if it occurs with less volume. Volume confirmation is critical here.

The only measurement that should always be followed is the one that moves according to the height of the triangle, rather than some arbitrary profit goal.

Even valid ascending triangles do not work when the market trend goes weak or choppy.

So, make sure you avoid these mistakes, especially if you want to increase the chances of success in this type of chart pattern.

The ascending triangle is unique due to its evident bullish inclination, whereas the other two patterns are more based on market context and direction of the breakout.