Ascending and Descending Triangles

In today's chart pattern lesson we will be discussing the ascending and descending triangles. These two chart patterns are similar as they both suggest a continuation of the underlying trend, that is, an ascending triangle formation is bullish while the descending triangle formation is bearish. It should be pointed out that both the above two formations can be reversals as well, therefore you must wait for the breakout. To overview Symmetrical triangles, please click here.

Ascending Triangles

• Trend: To qualify for as a continuation pattern, an established trend should exist.
• Top Horizontal Line: To form the top horizontal line there must be at least two reaction highs, in the above example, points 2 and 4. The highs do not have to be exact however the more the better. The highs and the subsequent lows should be some distance from each other.
• Lower Ascending Trend:Again at least two reaction lows are required to form the lower ascending triangle, each low should be higher than the last, points 1, 3 and 5 . The trend is not valid if the following low is lower.
• Duration: the average duration should be between one and three months.
• Volume: Usually, as the pattern develops, volume should decrease before, ideally, increases during the breakout.
• Price Target: Like the symmetrical triangle, the price target is calculated the furthest distance between the top horizontal line and the lower ascending line. Targets are only meant to be used as guidelines and other aspects of technical analysis should also be employed when deciding when to sell.

Descending Triangles

• Trend: To qualify for as a continuation pattern, an established trend should exist.
• Top Descending Line: there must be two reaction highs to form the trend line, and they must be separated by some distance points 1 and 4.
• Lower Horizontal Trend: Again, there must be at least two reaction lows points 2 and 3.
• Duration: As Above
• Volume:As Above
• Price Target: As Above

For further information on descending triangles, please click here.