The ascending triangle

In an ascending triangle the price keeps running into the same ceiling but falls back less each time. Buyers step in earlier. At some point the pressure is enough to break through, or it isn't.

What it's about

At the top there's resistance where sellers are waiting. Below, the lows are rising. The range narrows until the price leaves one side or the other.

How to recognise it

• At least two highs at the same level.
• At least two rising lows.
• The swings get smaller.
• A close above the resistance counts as a breakout.

How the price target is estimated

The height of the triangle at its widest point is added to the breakout point. Resistance at €80, first low at €72: the target is around €88.

Where it misleads you

Ascending triangles don't always break upwards. If the price breaks down through the rising line, it often falls fast because many have their stop right there. And breakouts that poke briefly above the ceiling and fall back are common.

An example trade with made up numbers

Sven has €10,000 in his account and risks at most €150 per trade. A stock rises above resistance at €80. Sven buys at €80.50 and sets his stop loss at €77.50. With that distance, he buys 50 shares for €4,025. Costs: €1 each to buy and sell, plus about 2 cents of spread per share on each order.

If it works: The price reaches the target at €88 and Sven sells. Sven is €375 ahead. After €2 in fees and €2 in spread, €371 is left.

If it goes wrong: The breakout fails and the stop fills at €77.40. That's a €155 loss, €159 with costs.

Sven put his stop below the last low in the triangle. If that breaks, the idea of rising lows is disproved.