Technical trading has without a doubt become one of the most widely used trading strategies used in the market today, and while there are several setups one could use in technical trading – very few has proven to be as successful as the ascending triangle pattern. If you would like to become a real gain-maker in the market, the following manual to understanding and trading this pattern will most certainly be of great help to you.
The Ascending Triangle Pattern Explained
The ascending triangle – also commonly referred to as the right-angle triangle is a bullish formation that is formed during an uptrend. This formation, in general is considered to be a continuation pattern and is easily identified by the distinct triangle shape created by two trendlines.
Here, the triangle itself is marked by higher lows (downside) and a set resistance level (upside). The share prices will bounce between the the downside and upside, essentially causing a squeeze. Once the price breaks above the resistance level (known as the breakout zone) – you have a buy signal and action should be taken.
How to Trade the Ascending Triangle Pattern in 3 Easy Steps
It is already an established fact that the ascending triangle is easily identiafiable and generally, has a higher occurence of breakouts as appose to other technical setups in stock trading. If you are new to the trading scene, then you will surely want to learn how to trade the ascending triangle. The following 3 steps will help you in getting started with ease.
1. Draw your resistance line by connecting the top level dots on your graph. The area just above the resistance line is where the breakout zone will be.
2. Place your initial stop below the support level on your graph.
3. When the price moves into the breakout zone (area above your resistance line) and you have confirmation that the given share can sustain a certain level in price – enter the market with a stop-buy order.
We can safely say that there is much profits to be made from using the ascending triangle pattern, especially since the ascending triangle produces less false signals compared to other technical setups. However, instead of keeping an eye on your actual pattern, place your core focus on price confirmation as an indication to enter the market. You are bound to reach success.