How to Trade Ascending Triangle Pattern

The ascending triangle pattern is a common chart pattern which is used by traders to identify potential bullish breakouts in the on the stock chart. In this post, we’ll take a closer look about ascending triangle pattern, how to identify it and how to trade it?

What is Ascending Triangle Pattern?

The ascending triangle pattern is a bullish continuation pattern which forms, when the price of a stock is trading within a narrow range. The pattern continuously takes horizontal resistance and an ascending trendline acting as a support. The resistance level is formed by a horizontal line connecting two or more swing highs, while the trendline is formed by connecting two or more swing lows with an upward-sloping line.

As the price continues to trade within this range, the resistance level acts as a barrier for the price to move higher, while the trendline acts as a support level for the price. The pattern is confirmed when the price breaks above the resistance level.

How to trade the Ascending Triangle Pattern?

To trade ascending triangle pattern we will use following steps:

Step 1: Identify the pattern

The first step is to identify the ascending triangle pattern. Look for a series of higher lows forming an ascending  trendline and a horizontal resistance level that is connecting two or more swing highs.

Step 2: Wait to confirm the pattern with a breakout

Once you have identified the ascending triangle pattern, you need to confirm it. The pattern is confirmed when the price breaks above the horizontal resistance level. This is typically accompanied by a high volume of trades, indicating that there is strong buying pressure in the market that tends to breakout.

Step 3: Enter into the trade

After the pattern has been confirmed and you got a breakout, you can enter into the trade. A common strategy is to enter a long position when the price breaks above the resistance level and sustained. You can set your stop loss below the ascending trend line or a previous swing low. Your profit target can be a next resistance level or a predetermined target based on the risk-to-reward ratio either 1:1 or 1:2 and so on .

Step 4: How to Manage your trade

Once you have entered into the trade, Most important is  to manage your risk and monitor the trade closely. If the price moves against you, Then you may need to adjust your stop loss or exit the trade. If the price moves in your favor, you can consider trailing your stop loss to lock in profits, that is a good strategy.

Conclusion

As we have earlier said, The ascending triangle pattern is a bullish continuation pattern, By following the steps outlined in this article, you can learn how to trade the ascending triangle pattern and take advantage of potential bullish opportunities. As with any trading strategy, it’s important to use proper risk management techniques and to have a well-defined trading plan.

This is the end of the post “How to Trade Ascending Triangle Pattern” hope you got some value from it.