The Ascending Triangle
The Ascending Triangle usually signals a continuation pattern in an uptrend, but sometimes can be found at the bottom of a downtrend, signaling a reverse.
This pattern has a flat upper trendline while the lower trendline slopes upwards.
Chart by MetaStock
The completion of the formation occurs when the price breaks through the upper, flat trendline before finishing the apex of the triangle.
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The following are key points in confirming the ascending-triangle pattern:
On the ascending triangle, the horizontal line represents overhead supply that prevents the security from moving past a certain level.
It is as if a large sell order has been placed at this level and it is taking a number of weeks or months to execute, thus preventing the price from rising further. Even though the price cannot rise past this level, the reaction lows continue to rise.
It is these higher lows that indicate increased buying pressure and give the ascending triangle its bullish bias.
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