An ascending triangle is a chart pattern with a flat line across the top and a rising line underneath. Buyers keep stepping in at higher prices while sellers hold the same ceiling. When the ceiling finally gives way, the move up can be quick. It is one of the more reliable bullish patterns, and one of the easiest to draw.
What an ascending triangle looks like
Draw a horizontal line across at least two highs that stop at roughly the same price. That is resistance. Then draw a rising trend line under at least two higher lows. The two lines close in on each other, which gives the triangle its shape.
The flat top tells you a seller (or a group of sellers) is happy to sell at one price. The rising lows tell you buyers are getting keener and will not wait for the price to fall as far each time. Something has to give, and more often than not it is the sellers.
Ascending triangles usually form part-way through an uptrend, as a pause before the next leg higher. They can also appear at the bottom of a downtrend, where they act as a reversal pattern.
How to confirm the pattern
- At least two touches of the flat top and two rising lows. Three or more of each is better.
- Volume tends to shrink while the triangle forms, as the price range gets tighter.
- The breakout should come on a close above the flat top, ideally with a clear jump in volume.
- Breakouts most often happen somewhere between two-thirds and three-quarters of the way to the point where the lines would meet. A price that drifts right into the tip has lost its energy.
How to trade an ascending triangle
- Entry: buy on a daily close above the flat top. A more patient entry is to wait for the price to come back and test the old ceiling, which should now act as support.
- Stop: place it below the last rising low inside the triangle. If the price falls back through that low, the pattern has failed.
- Target: measure the height of the triangle at its widest point (from the first low up to the flat top) and add that distance to the breakout price. If the triangle is 50 points tall and breaks out at 1,000, the target is around 1,050.
Check the reward against the risk before you buy. If your stop is 30 points away and the target is 50 points away, that is a 1.7 to 1 trade. Many traders want at least 2 to 1.
Mistakes to avoid
- Buying before the breakout. Until the price closes above the top, it is still just resistance.
- Ignoring the trend. An ascending triangle inside a strong downtrend is much less reliable.
- Trusting a breakout on thin volume. False breakouts are common, and low volume is often the warning sign.
- Forcing the lines. If you have to bend the drawing to fit, there is no pattern.
The three types of triangle
There are three triangles traders watch. The ascending triangle (flat top, rising lows) usually breaks up. The descending triangle (flat bottom, falling highs) usually breaks down. The symmetrical triangle has both lines sloping in and can break either way, though it usually follows the trend that came before it.
Related guides
This guide is for education only and is not financial advice. Trading carries risk; you can lose more than you expect.