The Ascending triangle pattern is a commonly used chart in technical analysis. It is formed based on price movements that create a horizontal line following trend peaks. At the same time, an uptrend line is formed following the reversal bottoms. Based on that, traders have more insight into future price fluctuations and the possibility of resuming the current trend. In this article, Forex Trading will introduce readers to more details about this continuation candlestick pattern. Let’s see!
Learn the basics of the ascending triangle pattern
The ascending triangle candlestick chart is one of three chart types that belong to the continuation candlestick pattern. It signals a pause in the current trend and the price will tend to converge to a point upon breaking the pattern. So specifically, what is the Ascending Triangle candlestick pattern? What are its characteristics and roles?
What is a rising triangle pattern in technical analysis?
The ascending triangle chart in English is Ascending Triangle and is a commonly used chart pattern in Forex technical analysis. This candlestick pattern is formed based on price moves, creating a horizontal line following reversal highs and an uptrend line forming following reversal lows. These two lines will form a triangle. At that time, traders often watch for breakouts from these candlestick patterns to identify trends and make predictions.
What are the characteristics and meaning of the ascending triangle candlestick chart?
Ascending triangle pattern are extremely easy to identify. Usually, this candlestick pattern has a shape quite similar to a right triangle. In particular, the resistance line is horizontal above (passing through at least 2 peaks); The remaining edge is a straight line pointing upward (going through at least 2 bottoms) that acts as a support line.
In Forex technical analysis, ascending triangle candlestick patterns have great significance. Because when this pattern appears in the middle of an uptrend, it is expected that sellers will become weak. On the contrary, the buyers are overwhelming and growing stronger. If the bottom is pushed higher, it will show that the buyers are putting pressure on to break the resistance. And this will be the best time for traders to place a Buy Stop order. Until the purchasing power is strong enough to cause the price to break out of the resistance line. At the same time, purchasing power continues to increase, pending orders will be simultaneously activated.
However, sometimes the buying force is not strong enough to push the price up because the resistance level is too strong. Therefore, traders should combine it with many other indicators for analysis without overusing theoretical models.
See more: Analyze & forecast effective candlestick pattern
Analyze the components that make up the ascending triangle model
To construct a bullish triangle candlestick pattern, there must be at least 2 peaks and 2 reversal bottoms. From there, the trend lines of the ascending triangle can be formed. However, if there are more reversal tops and bottoms, the pattern’s trend line will be more reliable.
In addition, trading volume is also an important factor in forming the perfect model. In particular, the triangle model is a miniature model, so trading volume will tend to decrease in the ascending triangle. Right now, traders will observe whether trading volume increases to a breaking point or not. If the price breaks out while volume decreases, it signals that the breakout lacks strength and the price could move back into the pattern. This is considered a false breakthrough.
An illustrative example of the ascending triangle continuation candlestick pattern
To help readers visualize and better understand the ascending triangle pattern. Below is an example illustrating the ascending triangle continuation candlestick pattern. In this case, the candlestick pattern is in a downtrend and the price will continue to decrease after passing the breakout point. Once the price falls below the breakout point, the investor will achieve the best profit target. What to do now is to give a sell signal when the price is below the trend line.
Note that candlestick patterns of this width will have a higher level of risk or reward than narrower candlestick patterns. If in a narrow pattern, the stop loss will become smaller due to the smaller distance to the breakout point. However, traders can still achieve their profit goals, more or less.
Instructions for effective trading with ascending triangle candlestick patterns
When trading with the rising triangle pattern, traders need to identify and classify signals to come up with an appropriate trading strategy. After drawing two support and resistance trend lines on the candlestick pattern and identifying them correctly. You can apply trading methods with specific steps such as:
- Entry point: Buy if the price breaks the resistance level, sell if the price breaks out of the support line.
- Stop loss point: Trader sets stop loss at the nearest bottom for Buy orders and vice versa at the nearest peak for Sell orders.
- Take profit point: Set at a point where the distance from that position to the Breakout point is equal to the height of the triangle and must be in the same direction as the entry trend.
See more: Optimize trading with IC Markets Exchange
Things to keep in mind when applying the rising triangle model in Forex trading
To be able to take full advantage of the functions of the ascending triangle continuation candlestick pattern. There are some important things that investors should take careful note of, including:
- Any candlestick pattern has its own advantages and disadvantages. Therefore, traders should use it in combination with other candlestick reversal patterns such as inverted head and shoulders pattern, and triple bottom pattern … Or use additional indicators RSI, and MACD… to give more accurate signals.
- Careful research is needed in the stage of accurately identifying the Ascending Triangle candlestick pattern. Because some investors are easily confused with the pennant model or the wedge model, leading to incorrect trend predictions.
- This candlestick pattern only really forms when there are 2 peaks and 2 bottoms.
- Regularly monitor Forex trading volume. Because this is a signal predicting that the price will fluctuate in a specific trend.
- Always set limits (stop loss, take profit) before entering a Buy or Sell order. And absolutely do not trade with an amount that exceeds your ability to bear losses.
Summary:
Through the above article, surely readers can better understand the ascending triangle pattern. However, to make trading more effective, traders need to practice a lot before applying. At the same time, know how to combine strategic tools to make accurate forecasts. If you are having difficulty learning about indicators, candlestick patterns… Follow Forex Trading now to receive more useful information and answers from us.
FAQs:
What type of candlestick pattern is the ascending triangle candlestick pattern?
The Ascending Triangle candlestick chart is one of three types of triangle continuation candlestick patterns.
What are the limitations of the ascending triangle candlestick chart?
Just like any other type of candlestick chart, bullish triangle candlesticks are not guaranteed to be 100% accurate. Because that depends on many different factors: trading volume, pricing strategy…
How to maximize effectiveness with the ascending triangle candlestick chart?
Traders should combine the model with other indicators and tools to make accurate forecasts. For example RSI, Bollinger Bands, MACD…
