The Ascending Triangle Chart Pattern Forex Trading Strategy is another trading strategy that is also based on price action trading and it is the opposite chart pattern to the Descending Triangle Chart Pattern and Trading Strategy.
Currency Pair: Any
Forex Indicators: none required.
Triangle chart patterns, generally tend to be explosive chart patterns…which means when a breakout happens during any of the 3 triangle patterns (ascending, descending and symmetrical), they tend to continue in the direction of the trend for a long time. Which means that you can get a lot of profitable pips if you know how to trade these triangle chart patterns properly.
- The ascending triangle chart pattern forms when two converging trendlines (support levels & resistance levels) converge to form an apex (point).
- The ascending triangle chart pattern is generally considered a bullish formation and it usually forms during a currency pair uptrend as a continuation pattern.
- This ascending triangle chart pattern is confirmed when the currency pair price breaks out of the ascending triangle formation to the upside and closes above the upper resistance trendline.
- If however, when the currency pair breaks out to the downside, the ascending triangle now is a reversal pattern.
HOW TO SPOT THE ASCENDING TRIANGLE CHART PATTERN
- Firstly, the market has to be in an uptrend and there will come a time when it will slow down(consolidate) with it hits resistance levels. Price will fall and find support on a rising trendline. Price gets squeezed into a tight spot(more like a coiled spring!) and then a breakout happens
- The two important clues are the upper horizontal resistance line & the rising support trendlines. You must be able to spot these and draw them and wait for the breakout to happen.
HOW TO TRADE THE ASCENDING TRIANGLE CHART PATTERN SETUP
Trading the ascending triangle chart pattern is very simple and here’s how:
- Once you’ve identified the formation of the ascending triangle pattern, you wait for a breakout candlestick to break the resistance line to the upside. Make sure that, that breakout candlestick CLOSES first above that resistance line, ok?
- Then next thing you do is place a buy stop order 3-5 pips above the high of that breakout candlestick.
- Then Place you stop loss. You have a couple of stop loss placement options: the first option is to place it down below the support line which is the best option. The second option is to place it halfway point between the resistance and support line. Another alternative is to place it anywhere from 5-30 pips below the low of the breakout candestick.
- Your take profit target should be 3 times what you risked in pips or you can use the height of the pattern (in pips) and calculate your profit target price level.
ADVANTAGES OF THE ASCENDING TRIANGLE PATTERN FOREX TRADING STRATEGY
- It is a very robust & reliable trading system in a strong trending market where you can make profits very easily.
- It is price action trading at its best-no other forex indicators are required.
- It is easy to spot the trading setup and wait for the breakout-if you know what to look for.
- if you trade in larger timeframes like the 1hr and 4hrs or the daily chart, your profits in pips would be big.
DISADVANTAGES OF THE ASCENDING TRIANGLE CHART PATTERN FOREX TRADING STRATEGY
- depending on the timeframe you are trading in, the stop losses may be quite large, therefore you need to determine your trading risk before placing your trade(s)
- such is the nature of the forex market, don’t expert a 100% success rate on every ascending triangle pattern formation.
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