Written and copyright © 2008-2013 by Thomas N. Bulkowski. All rights reserved.
This page describes the ascending triangle pattern of the Elliott wave principle, how price moves not in a straight line but in
a series of rises and retracements.
The figure to the right shows what an ascending triangle looks like in a bull market. The ascending triangle is a region of horizontal
price movement, a consolidation of a prior move, and it is composed of "threes." That means each of the A-B-C-D-E waves have three subwaves.
I labeled the B subwaves with red numbers, 1, 2, and
3 as an example. Expect volume and volatility to recede as the pattern moves toward the breakout, but this is not a requirement.
In an ascending triangle, the top of the triangle bumps up against overhead resistance (the horizontal red line),
and the bottom of the triangle slopes upward following another red trendline.
An ascending triangle in a bear market is not an inverted picture of a bull market triangle. Rather, the chart to the right shows
an ascending triangle with the waves inverted while still obeying the flat top and up sloping bottom trendlines.
The A-B-C-D-E waves subdivide into threes, forming a 3-3-3-3-3 configuration.
On rare occasions, an ascending triangle can nest inside an ascending triangle. You see this when the wave count exceeds the A-B-C-D-E format,
forming a nine wave pattern.
Also, Frost and Prechter say that when price reaches the apex of the triangle, expect the market to turn.
Ascending Triangle Rules
The ascending triangle has rules that govern its shape. They are listed here.
- The tops of the waves peak near the same price, following a horizontal trendline.
- The bottoms of the waves generally follow an up-sloping trendline.
- Five waves compose the ascending triangle (A-B-C-D-E), unless extended.
- Each of the A-B-C-D-E waves are composed of three subwaves, so it has a 3-3-3-3-3 configuration.
- Volume and volatility tend to recede over the life of the pattern, but this is not a requirement.
-- Thomas Bulkowski
Copyright © 2008-2013 by Thomas N. Bulkowski. All rights reserved. Two hands and just one mouth...now THAT's a drinking problem!