Written by and copyright © 2005-2016 by Thomas N. Bulkowski. All rights reserved. Disclaimer: You alone are responsible for your investment decisions.
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On pages 711 to 729 of the book
Encyclopedia of Chart Patterns Second Edition,
you can read the complete treatment of ascending triangles, including identification guidelines, focus on failures,
statistics, trading tactics, and a sample trade.
If you click on this link and then buy the book (or anything) at Amazon.com, the referral will help support this site. Thanks. -- Tom Bulkowski
$ $ $
Ascending Triangle Overview
The ascending triangle is a mediocre performer despite its reputation as
a reliable chart pattern. In fact, the ascending triangle performs best when the breakout is
downward, especially in a bear market.
Click ascending triangle to read about the Elliott wave version.
Important Bull Market Results for Ascending Triangles
Overall performance rank for up/down breakouts (1 is best): 17 out of 23; 9 out of 21
Break even failure rate for up/down breakouts: 13%; 11%
Average rise/decline: 35%; 19%
Throwback/pullback rate: 57%; 49%
Percentage meeting price target for up/down breakouts: 75%; 68%
The above numbers are based on hundreds of perfect trades. See the glossary for definitions.
Ascending Triangle Identification Guidelines
|Price trend||Can be any direction leading to the chart pattern.|
|Shape||Triangular. Prices move between two converging trendlines.|
|Trendlines||Two trendlines bound prices; the top trendline is horizontal and the bottom one slopes upward.|
|Crossing||Price must cross the pattern from side to side, filling the triangle with price movement, not white space.|
|Touches||Price must touch each trendline at least twice, forming distinct valleys and peaks.|
|Volume||Trends downward 77% of the time.|
|Breakout||Upward 70% of the time and 61% of the way to the triangle apex (upward breakouts) and 62% of the way for downward breakouts.|
Ascending Triangle Trading Tips
Consult the figure on the right.
|Measure rule||Compute the height from the price of the horizontal
trendline (B) to the lowest valley in the pattern
(A) and then multiply it by the above “
percentage meeting price target.” Add it (upward breakouts) or subtract it
(downward breakouts) from the breakout price. The breakout price
is the point at which price pierces the trendline. The associated link provides
|Stop||Place a stop loss order on the side opposite the breakout
unless that would be too far away. Click the link on the left for stop placement
information. For example, if the breakout is upward, a stop at any of the minor
lows on side A would work well. For downward breakouts,
use the price of B as the stop price.|
|Rise||Patterns with a long-term rise (over 6 months) leading to the triangle show price rising an average of 37% after an upward breakout. Those with a
short-term decline (less than 3 months) leading to the triangle show a 41% average rise after an upward
Pullbacks||Throwbacks and pullbacks hurt
post breakout performance. The links on the left define terms. For performance
information on throwbacks
click the associated link.||
The Measure Rule
Score your chart pattern for |
performance by clicking