As of 10/07/2024
Indus: 41,954 -398.51 -0.9%
Trans: 15,783 -31.37 -0.2%
Utils: 1,027 -24.05 -2.3%
Nasdaq: 17,924 -213.95 -1.2%
S&P 500: 5,696 -55.13 -1.0%
|
YTD
+11.3%
-0.7%
+16.5%
+19.4%
+19.4%
|
 43,500 or 41,600 by 10/15/202416,800 or 15,700 by 10/15/20241,125 or 1,025 by 10/15/202419,000 or 17,600 by 10/15/20245,900 or 5,600 by 10/15/2024 |
As of 10/07/2024
Indus: 41,954 -398.51 -0.9%
Trans: 15,783 -31.37 -0.2%
Utils: 1,027 -24.05 -2.3%
Nasdaq: 17,924 -213.95 -1.2%
S&P 500: 5,696 -55.13 -1.0%
|
YTD
+11.3%
-0.7%
+16.5%
+19.4%
+19.4%
| |
|
43,500 or 41,600 by 10/15/202416,800 or 15,700 by 10/15/20241,125 or 1,025 by 10/15/202419,000 or 17,600 by 10/15/20245,900 or 5,600 by 10/15/2024 | ||
Trading lessons added 6/14/24.
For more information on this pattern, read Encyclopedia of Chart Patterns, 3rd Edition. If you click on the link and then buy the book (or anything) during the visit at Amazon.com, the referral will help support this site. Thanks.
$ $ $
The ascending triangle is a decent performer after an upward breakout but suffers after a downward breakout.
Click ascending triangle to read about the Elliott wave version.
The above numbers are based on more than 1,400 perfect trades. See the glossary for definitions.
| Characteristic | Discussion |
| 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 one trendline at least three times, the other at least twice, forming distinct valleys and peaks. |
| Volume | Trends downward at least 78% of the time. |
| Breakout | Upward 63% of the time and 64% of the way to the triangle apex (for both breakout directions). |
Consult the figure on the right.
| Trading Tactic | Explanation |
The Measure Rule
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|
| 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 more information. | ||
| 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 intermediate-term rise (between 3 and 6 months) leading to the triangle show price rising an average of 49% after an upward breakout. |
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| Throwback and Pullbacks | Throwbacks and pullbacks hurt post breakout performance. The links on the left define terms. For performance information on throwbacks and pullbacks, click the associated link. |
Expect the market to turn when it reaches the apex of the triangle. See Triangle Apex and Turning Points.
The figure shows an example of an ascending triangle. Price bounces between two converging trendlines, the top one is horizontal and the bottom one slopes upward.
To calculate a price target, subtract the price of the lowest valley in the chart pattern (A) from the price of the top trendline (B). That gives the height. Multiply the height by the 'percentage meeting price target' from the Important Bull Market Results table near the top of this page, and add it to the price of the top trendline B. In this example, point C makes for a good stop location.
For downward breakouts, compute the height in the same manner only subtract the height from C.
I present the information in slider format, so be sure to click the left or right arrows to view another slide.
This chart shows the stock breaking out of the triangle downward (blue dot), reversing, and shooting out the top of the triangle, busting the downward breakout. Almost half (46%) of ascending triangles with downward breakouts will bust (move higher), rising an average of 36% (to the ultimate high). Most (67%) of the busts are single ones (a move down followed by a move higher), so the chance of additional up-down cycles is less.
Here's another example of a busted ascending triangle. The breakout is downward, the stock reverses course, and rises to a big gain.
I had to hunt through a lot of ascending triangle charts to find a picture of a multi-peak/ascending triangle combination. Multi-peak patterns are bearish. Any bullish pattern may breakout upward but the rise often fails without price rising far. In this case, the breakout is downward from the triangle, the pattern busts (which is bullish), but the rise after the bust is tiny (to the green dot, which is the ultimate high). The stock tumbles thereafter.
The chart says it all. Traders had two days to sell.
-- Thomas Bulkowski
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