Trading The Ascending And Descending Triangle Patterns
Have you ever realized that you can achieve so much more when you focus on less? Especially when less means one or two things at a time.
There are plenty of patterns to be traded in the Forex markets, and guess what? THEY ALL WORK! You need to find what works for you and stick to it. Simple.
In today’s article, we will discuss triangle patterns which includes ascending triangles and descending triangles.
We will look at what they are and how they work in actual markets. The examples may help us spot faults or imperfections because it is essential to realize that no pattern will play out 100% to the tee. However, it will play out, and you can count on that to bank a good percentage gain on your trading account.
Now, these patterns form in a mid-trend area as opportunities for a continuation of the trend. Usually, the Forex trader will wait for a break of the triangle pattern formed and enter on a retest of that triangle.
What is the Ascending Triangle Pattern?
Thousands of Forex traders have used the ascending triangle pattern to find market entries, stop loss areas, and even take profit regions.
The ascending triangle is a pattern with a roof acting as resistance in a bullish market that shows some form of consolidation.
Ascending triangles show us that the bulls (long biases) have more power as an increased number of higher lows form on the chart, usually as price approaches the roof (resistance), as Forex traders expect a break resistance and further bullish momentum.
How to trade the Ascending Triangle Pattern?
As a Forex trader, the earliest you would look to enter is on the break of resistance but, for further confirmation, you would wait for a retest of that resistance that has now turned into support and ride the trade.
You place your stop loss at the most recent swing low according to the market conditions at the time. It is essential to pay close attention to the volatility in the market because stop hunts may come lower into a given area before the ascending triangle plays out.
When looking for a take profit region, you should vertically measure the beginning of the triangle and make that the take profit region from the resistance level break.
What is the Descending Triangle Pattern?
The descending triangle is a pattern that shows a continuation in trend with price approaching a support level while this time is creating lower highs showing aggressive bearish momentum.
How to trade the Descending Triangle Pattern?
Trading the descending triangle is the exact opposite of trading the ascending triangle. So this time, set your stop loss above the swing high and set your take profit measuring the vertical distance at the start of the triangle to the floor (support).
With trading triangle patterns, you much realize that they will not always be perfect. Looking above, you can see that the momentum of one candle breaks through resistance; however, price pushes back into the triangle. Price in the ascending triangle pattern example came back into the triangle, perhaps to hunt stops, before proceeding.
Happy trading my fellow Forex traders!