Ascending and Descending Triangles: A Tale of Two Breakouts for Exp20
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Introduction
Triangle patterns are among the most common and reliable consolidation patterns in technical analysis. They represent a temporary pause in the prevailing trend, during which the forces of supply and demand reach a state of equilibrium before the price breaks out in a decisive move. The two most prominent types of triangles are the ascending triangle and the descending triangle. Understanding the distinct characteristics of each is important for traders seeking to capitalize on the effective breakouts they often precede.
The Ascending Triangle
The ascending triangle is a bullish continuation pattern that forms in an uptrend. It is characterized by a horizontal resistance line and a rising support line. This formation indicates that while there is a clear level of supply at the resistance line, the buyers are becoming increasingly aggressive, as evidenced by the higher lows.
Formation
- Horizontal Resistance: A series of peaks at approximately the same price level.
- Rising Support: A series of troughs at successively higher price levels.
- Breakout: The pattern is confirmed when the price breaks out above the horizontal resistance line.
Volume
Volume tends to contract as the triangle forms, then expands significantly on the breakout.
The Descending Triangle
The descending triangle is the bearish counterpart to the ascending triangle. It forms in a downtrend and is characterized by a horizontal support line and a falling resistance line. This pattern suggests that while there is a clear level of demand at the support line, the sellers are becoming more aggressive, as shown by the lower highs.
Formation
- Horizontal Support: A series of troughs at approximately the same price level.
- Falling Resistance: A series of peaks at successively lower price levels.
- Breakdown: The pattern is confirmed when the price breaks down below the horizontal support line.
Volume
Similar to the ascending triangle, volume tends to diminish as the descending triangle forms and then increases on the breakdown.
Price Objective Formula
The price objective for both ascending and descending triangles is calculated by measuring the height of the triangle at its widest point and projecting that distance from the breakout point.
Price Objective = Breakout Price +/- Triangle Height
Price Objective = Breakout Price +/- Triangle Height
Example Data Table
Consider the following hypothetical data for an ascending triangle pattern:
| Date | Price | Event |
|---|---|---|
| 2026-10-05 | 120 | Resistance |
| 2026-10-12 | 115 | First Trough |
| 2026-10-19 | 120 | Resistance |
| 2026-10-26 | 117 | Second Trough |
| 2026-11-02 | 121 | Breakout |
The triangle height is 5 (120 - 115). The price objective would be:
Price Objective = 121 + 5 = 126
Conclusion
Ascending and descending triangles are effective consolidation patterns that can provide traders with clear entry and exit points. Their well-defined structure and measurable price objectives make them a valuable addition to any trading strategy. By learning to identify these patterns and confirm them with volume, traders can position themselves to profit from the strong breakouts that often follow.