4. Ascending Triangle Breakout

Entry Logic

Price closes above the horizontal resistance of the ascending triangle. Confirm with 1.5x average volume. Use 5-minute chart. Entry after breakout candle close. Market condition is bullish or consolidating.

Exit Logic

Target 1: Measure height of triangle base and project upwards (100%). Target 2: 1.5x triangle height. Scale out 50% at Target 1. Trail stop with 10-period EMA. Exit if 5-minute candle closes back inside triangle. Exit all after 75 minutes if profit not met.

Stop Loss Structure

Hard stop 0.3x triangle height below breakout candle low. Max dollar loss $200. Max percent loss 1.5% of account. Structural stop at the horizontal resistance level.

Risk Management Framework

Risk 0.75% of account per trade. Daily loss limit 2.5%. Weekly loss limit 6%. Max drawdown 9%. R:R requirement 1.75:1 minimum for initial target.

Position Sizing Model

Size to risk 0.75% of account. Adjust for triangle height volatility. Increase size by 20% for A+ setups. Scale in 50% on initial entry, 50% on successful retest of breakout.

Trade Filtering

Avoid low volume triangles. Trade during active sessions. Focus on stocks with clear daily trend. Avoid major economic announcements.

Context Framework

Daily trend is upward or neutral. VWAP is below price. Price above 20-period SMA. Triangle forms after a strong move. Higher timeframe (15-minute) shows similar pattern or bullish trend.

Trade Management Rules

Move stop to breakeven after 0.75R profit. Scale out 50% at 1R. Add size on confirmed retest of breakout level. Manage initial move aggressively.

Time Rules

Optimal window 10:00 AM - 12:00 PM EST. Avoid first 30 minutes of market. Avoid late afternoon.

Setup Classification

A+: Clear horizontal resistance, rising lows, high volume breakout. A: Clear pattern, good volume. B: Less defined pattern, moderate volume. C: Low volume, choppy price action within triangle.

Market Selection Criteria

Instruments: Growth stocks, tech stocks. Volume: Min. 1.5M shares daily. Volatility: ATR > $0.75.

Statistical Edge Metrics

Win rate 60%. Avg win $280. Avg loss $120. Profit factor 2.3. Expectancy $96 per trade.

Failure Conditions

Breakout on low volume. Price re-enters triangle and breaks lower. Market sentiment turns bearish.

Psychological Rules

Be patient for breakout. Do not anticipate. Follow the plan. Avoid overconfidence.

Advanced Components

Regime detection: Use Volume Profile to confirm accumulation. Filter: RSI divergence prior to breakout. Correlation: Monitor sector strength. MTF alignment: 5-minute breakout, 30-minute trend confirmation.

Location

Strongest near daily high. Weakest in middle of daily range.