Technical analysis: Ascending & descending triangles

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• Towards the end of the pattern, the falling of prices continues even after it breaks the support line.
• An ascending triangle is usually considered a continuation pattern.
• Besides using a trailing stop loss technique, traders often use a price projection technique when using a technical indicator like a symmetrical triangle.
• As mentioned before, a descending triangle pattern is most likely bearish, but it may sometimes seem bullish as well.
• Descending triangle pattern is a bearish scenario with the series of consistent lower highs, forming a clear slanting line.

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Volume confirmation, make sure when the price breaches the support or the lower horizontal line, the higher volume should support the trend. The structure of the pattern tells that the pattern is bearish. Continuing lower highs indicate the selling pressure and suggest the sellers are aggressively shorting. Whenever the price moves up or down after breaking an important support or resistance, volatility increases. Everyone tries to catch the price, so don’t run behind it and wait for it to retest the breakout point.

Triangle Pattern

A descending triangle is a bearish candlestick pattern – meaning it foretells the occurrence of a period when the price of a particular security is expected to move downwards. It appears when through two lines – one joining a series of lower highs a second horizontal trend line that connects a series of lows. It is also quite easy to estimate a profit target from an ascending triangle pattern.

A continuation pattern can occur on either side of the trend. The pattern is formed by connecting the descending highs and ascending lows. At least two lower highs and higher lows should touch the Resistance and Support lines. Symmetrical Triangles are continuation patterns, so the breakout is accepted in the direction of the trend.

The highs may not be accurate, but they must be near to each other. IFCMARKETS. CORP. does not provide services for United States, BVI, Japan and Russian residents. If one can identify the good companies going through a rough patch in the short term, one can invest in them. An Eight month-long support of ₹2000 is clearly visible from the horizontal blue line.

This pattern is characteristic of a bearish market scenario where prices go down to a certain support level. A series of lower highs form an upper line, and the lower line is the support level. In 80 percent of cases, triangles are continuation patterns, and breakouts happen in the prevailing trend’s direction. But there are also exceptions, called triangle failures, where a triangle pattern denotes a trend reversal. It occurs when the breakout occurs in the opposite direction of the existing trend.

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Update your e-mail and phone number with your stock broker / depository participant and receive OTP directly from depository on your e-mail and/or mobile number to create pledge. Always be aware of the trend direction before the consolidation period. At least two highs are needed to make the top horizontal line.

A chart pattern that features two trend lines converging such that they connect in a series of peaks and troughs is a symmetrical triangle pattern or wedge chart pattern. Both trend lines should converge at a roughly equivalent slope, hence giving the shape of a triangle. If both the trend lines converge at an unequal slope, then they are no longer symmetrical. These lines are referred to as ascending or descending triangles. Just like the ascending triangle this is also a continuation chart pattern.

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What is the Descending Triangles Pattern?

Lower highs often occur in this pattern and price action is seen on the upside in this scenario. It is also possible to trade long positions using this strategy. The simplest strategy to trade using the descending triangle pattern is the breakout strategy. To capture short-term profits, a trader may pick a stock that is either in a consolidation phase or part of a downtrend. The flat lower trend line in the descending triangle chart pattern should be formed with at least two intermittent lows — while it’s not necessary that they need to be precisely the same, they should be reasonably close to each other. There should be a gap with respect to the time difference when they appear during the trading period.

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• Profit and Stocks is an exceptional team of market traders with over 12+ years of combined trading experience.
• A directional trade can be initiated on the basis of these patterns, but one should wait for the price to give a breakout.
• Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product.
• The base is the vertical line drawn from the flat trendline to mark the start of the descending trend.
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This is usually done by subtracting or adding the height of this descending triangle – depending on its direction – from the breakout price. In other words, the ascending triangle pattern’s width is used. This value will be added to the upside breakout point to get a proper estimate of the profit target. On the other hand, this same value is subtracted from the price if it breaks on the downside.

Cash Market | Bank of Baroda breaks out on a descending triangle pattern and marks start of an uptrend

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The bottom of the triangle usually is the flat level of support, with the upper side sloping downwards as the price makes lower highs. This pattern indicates “weakening support” and an approaching breakout to the downside. A possible “selling opportunity” is noted as the “lower highs “show us that the bears are gaining command. The price target for this pattern should be set by subtracting the entry price and the vertical height between the two trend lines at the breakdown. Descending triangle pattern is a bearish scenario with the series of consistent lower highs, forming a clear slanting line.

Then comes the descending triangle under technical analysis to be able to accumulate the stock which has short-term pain. There should be a downward shift in the price momentum of the security before the descending triangle. It’s important to note that investors shouldn’t pull out or pour money whenever the pattern appears. Triangle is a classic price action pattern that is applied by technical analysts to make predictions trading different financial markets. Depending on the shape of the triangle, there are three main variations of this pattern.

Similarly one can incorporate studies of MACD, Bollinger etc., to further enhance the pattern reliability and finally the profit. Volume confirmation, make sure when the price breaches the resistance or the upper horizontal line, the higher volume should support the trend. An Ascending Triangle pattern is a bullish continuation pattern because of its structure. During the period of consolidation, before breakout volume declines, a pause or a consolidation during the trend creates confusion for many traders, and the situation seems like indecision.

This stock is making lower highs with same low level on daily chart by forming a Descending triangle, breaking 2000 level will open the downside upto 1800 level. You may receive from time to time, announcement about offers with intent to promote this Website and/or facilities/products of ABC Companies (“Promotional Offers”). The Promotional Offer would always be governed by these Terms of Use plus certain additional terms and conditions, if any prescribed.

In this section, we will discuss ascending and descending triangle chart patterns. The descending triangle is precisely the opposite of an ascending triangle chart pattern. It forms within a long term downtrend for bearish consolidation phase before the stock cracks below the support. The use of technical indicators such as moving averages does not need volume estimation or a bullish signal just before a breakout translates to a successful trade entry position.

An ascending triangle chart pattern is bullish continuation patterns that indicate a stock price is expected to move in a bullish trend. The upper line is horizontal and acts as a resistance line, whereas the lower line represents the support line. The traders will go for higher low on the support line, and it finally joins with the resistance line to form a triangle.

The profit targets can be measured by considering the height of the back of the triangle and extending the distance from the lower breakout point. The “stop-loss” is placed above the down-sloping side of the triangle pattern. Measure the “profit target” by taking the height of the back of the descending triangle and extending that distance down from the breakout. Let us look at a few examples of the descending triangle chart pattern to understand the pattern better. Moreover, we will also understand why it is common to interpret it wrongly.

Descending Triangle Chart Pattern

Whatever the case may be, an explicit descending triangle pattern is clearly visible. This pattern indicates that the stock is losing upward momentum and that downward pressure may be building. Most traders use this Pattern as a potential sell signal as they expect that the price of the stock will eventually break down through the support level and continue to decline. On the other hand, if the share’s price breaks out on a lower volume, this signals a warning sign that the breakout will lack in strength. This indicates that the price could move back into the pattern, otherwise known as a ‘false breakout’. Hence, it is crucial that traders who are ascending triangle trading keep an eye out on the share volume when determining where the breakout point will be.

Traders usually combine an estimation of price target level with technical indicators in the descending triangle pattern to gain a stronghold in the market. Breakdown point before taking a short position in the asset after the descending triangle chart pattern is confirmed. There is a simple measuring technique to gauge a price target so as to make gains.

Aditya Birla Capital is the brand and accordingly all products and facilities are provided by respective ABC Companies as applicable. When the horizontal line of support breaks, it turns into resistance. Another way to trade a descending triangle is to enter once the prices break through the horizontal support line and come back to retest the new resistance. Use the resistance line and support line to recognize which triangle chart pattern is occurring. The main distinctive feature of this type of triangles is that it generally has a descending trendline connecting lower and lower highs and a horizontal trendline connecting the low points at approximattely the same level.

We already know that the prior trend has been a downtrend for this pattern. The price reaches the support level multiple times showing buying interest at this level. But whenever the price has bounced back up after testing the support it makes lower highs. These lower highs indicate that the sellers are fighting back to go beyond this support level. This whole scenario creates a bearish build up and eventually, there’s a breakdown at the support level, followed by continuation in the previous downtrend. Although ascending triangles are not directly displayed in Investar software, you can indirectly get them by enabling the Auto-Support/Resistance and Auto-Trendline features.