Forex Ascending Triangles:
An ascending triangle is a bullish pattern used in technical analysis and can be easily recognized. This is usually a pause during a longer trend. To say pattern as an ascending triangle it must have flat highs & higher lows. That means it should have a horizontal resistance line at the top and an ascending trend line at the bottom. Ascending triangles are bullish because the buyers are able to maintain a high price, but sellers can’t maintain a low price. Ascending triangles work best when the previous trend in the market is to the upside.
Check the following picture which shows an ascending triangle. A horizontal line is drawn at the top connecting the peaks and an ascending support trend line is drawn connecting the bottom troughs. This formed an ascending triangle.
Forex Ascending Triangle
Trading Entry: Since ascending triangles are bullish patterns wait until the top horizontal resistance line is broken with a strong candlestick. A strong candlestick means a candlestick which has a large body and small tails or no tails at all. Once the candlestick is completed enter the trade. Check the following picture. In the following picture the resistance line is broken with a strong candlestick. Moreover the candlestick does not have long tails. So it is a good opportunity to enter a long trade.
Forex ascending triangle broken with a strong candlestick body
If the resistance line is broken by the tail of a candlestick and not by the body of the candlestick and moreover if the candlestick has a long tail then do not enter the trade. Check the following picture. In the following picture the top resistance line is broken by the tail of the candlestick and not by the body of the candlestick. Moreover the candlestick has a long tail. So do not enter the trade.
Forex ascending triangle broken by the candlestick tail
Take profit and stop loss:
Once the top resistance line is broken with a strong candlestick, wait for the candlestick to be completed and enter the trade. Measure the base of the triangle. The difference between the top resistance line and the lowest low is the base of the triangle. The price difference should be the same amount as the breakout. Once breakout occurs enter trade. Set stop around 5 to 10 pips inside triangle. Set take profit target (limit) around 5 pips less than amount of the triangle base.
For example the base of the triangle is 50 pips. So the expected break out is 50 pips. Once the break out occurs the candlestick penetrated around 10 pips upward. So the remaining break out is 40 pips. Since we have to use the profit target around 5 pips below the expected break out the target will be 35 pips. Check the following picture.
Take profit and stop loss
The following are some of the real time examples.
AUDJPY Four Hour Chart Ascending Triangle:
The following is the four hour chart of AUDJPY. As of writing this article it formed an ascending triangle and the top resistance line was broken around 12 hours back. The base of the triangle is around 100 pips and the candlestick that broke the top resistance line has penetrated around 10 pips upward. So there is a potential profit target of 85 pips (5 pips taken out).
AUDJPY four hour chart ascending triangle
NZDUSD Four Hour Chart Ascending Triangle:
The following is the four hour chart of NZDUSD. The base of the triangle is around 110 pips and once the break out occurred it went up almost the same number of pips as the base of the ascending triangle.
NZDUSD four hour chart ascending triangle
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