The ascending triangle breakout is fantastic to trade. Do you find yourself missing the running stocks and getting into trades too late? What if I told you one strategy that highlights breakouts before they happen?
Luckily, all you need to do is recognize the pattern in the wild to identify the breakouts that are brewing. In this blog post, you'll learn how to spot specific breakouts with the ascending triangle breakout strategy.
Furthermore, no matter your trading style, whether it's swing trading, day trading or scalping, this pattern can work for you.
Let's get into it!
Bullish. We consider the ascending triangle pattern to be bullish because it leads to a bullish breakout. Once spotted, traders go long when the upper resistance level breaks.
A Continuation Pattern. Unlike a rounding bottom pattern which is a reversal pattern, this strategy is a bullish continuation pattern. Any time we see an ascending triangle, we consider it a positive continuation pattern. In other words, it's predictive in nature, and the uptrend should continue.
Flexible. Once identified, ascending triangle patterns can be used and applied on pretty much any time frame (i.e. intraday, hourly, daily, and weekly charts.
First Element: Upward slope followed by a flat top pause and consideration
Significance: This means the market has tried multiple times to break the resistance top, but it couldn't because the bears are persisting. Because of this, a resistance line develops.
Second Element: A slanting or a rising trend line moving upwards. Significance: The rising support trend line means the price is making higher lows; the bulls are persisting.
It can be helpful to think of the ascending triangle breakout as an ongoing battle between the bulls (buyers) and the bears (sellers) playing out on the chart.
In the beginning, the forward momentum of the bulls pushes the price higher. Unfortunately, they hit a wall and a flat resistance level forms as they get overpowered by the bears.
For whatever reason, with each new successive higher low, the bulls become a little bit more aggressive. And as the bulls persist, they set new higher lows seen in the upward moving bottom trend line.
It's a constant push-pull tug of war with the price confined to the vertex of the triangle. We've reached a climax; things could go either way at this point.
Either the bears win, and price falls through the bottom trend line. Or, the bulls win and break the flat resistance line.
Once this flat resistance line breaks, hold on for the ride, a breakout's triggered, and the bulls push the price up.
For fear of a false breakout on the ascending triangle breakout, you need to wait for a close above the resistance line. I can't stress enough that you buy as soon as the break above the flat resistance level happens.
Apart from this, it's useless to wait for additional confirmation signals. The best strategy with continuation patterns is to buy straight away with the breakout.
The ascending triangle breakout strategy is an extremely powerful chart setup that exploits many of the supply and demand imbalances in the market. Using price action in conjunction is going to complete the trading strategy.
By identifying the setup, and recognizing the opportunity before others, it's a perfect head start.
Luckily, if you missed the beginning of the trend, you can get in and ride the trend up. Thank you for reading! Don't forget to read our blog posts on some other powerful chart patterns.