Ascending & Descending Triangle Patterns
Ascending & descending triangle patterns produce an approximate 72% win rate.
The triangle pattern usually occurs when the market is trending and acts as a continuation pattern.
An ascending triangle pattern is defined by a bullish trend with two or more equal highs following, along with a series of higher lows.
A descending triangle pattern is defined by a bearish trend with two or more equal lows following, with a series of lower highs.
The ascending triangle pattern is complete when price breaks above the horizontal resistance area, and is considered successful if price continues beyond the breakout point a minimum of the same distance as the triangle width.
The descending triangle pattern is complete when price breaks below the horizontal support line, and is considered successful if price continues beyond the breakout point a minimum of the for at least the same distance as the triangle width.
When you recognize an ascending or descending triangle pattern, you can either A enter at market price once the breakout occurs or B set a pending order.
The pending order you would want to set would be just above the resistance area for an ascending triangle pattern or just below the support area for a descending triangle pattern.
In the example below, you see a descending triangle pattern. The support line is the upper line and the pending order is just below that support, for a short position.
Trail Stopping & Risk To Reward
After you have decided whether you will be entering at market price or setting pending orders, you must have a trading plan in place for take profit levels and solid risk management.
In the example below see a descending triangle pattern. The lines represent TP (take profit) levels for multiple positions. They are 1:1, 2:1, 3:1 and a 4th position of 3:1 with trail stop.
In my next lesson, I will be covering Ascending & Descending Channel Patterns
See you then!
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