To get started with forex trading, a trader must open a live trading account with a broker, such as Saxo. After opening a live account, it is best they come up with some kind of trading strategy before trading live, to remain focused and disciplined. In this article, we take a look at the ascending triangle forex trading strategy that traders may opt to use.
Anascending triangle is bullish price patterns which gives traders an indication of a potential price increase.
It’s formed by having the price rally to find resistance at the top of the triangle, then drop back down to find support on the bottom of it.
The reason this pattern is considered bullish is because as the stock continues to trade within this pattern, it creates higher highs and higher lows as time progresses.
What is an ascending triangle?
An ascending triangle is a chart pattern forex traders use when they see a bullish trend. The pattern forms when the price of the currency being traded is moving between a resistance level and a support level.
With an ascending triangle, the resistance level increases over time and the support level decreases over time.
The most common and best-known ascending triangle is the symmetrical triangle. A symmetrical triangle develops in a market when price patterns are making repeated attempts to surpass a resistance level, but the lower levels keep pushing it back.
An ascending triangle is formed when the price of the asset rises but never breaks out. The stock or currency will often make higher highs and higher lows, converging on a specific value.
This pattern is considered bullish because it suggests that buyers are pushing up the price without sellers pushing down; it also suggests an imminent breakout.
Identifying an ascending triangle
There are three important things you need to know about an ascending triangle:
- the price,
- the pattern and
- the breakout
The first thing you want to do is take a look at the chart and identify an ascending triangle. You’ll see that as time goes on, it becomes more and more obvious.
An ascending triangle is a continuation pattern that is characterized by high volatility and an upward trend.
The pattern can be detected when there is a series of higher highs and higher lows followed by a small range of lower highs and lower lows.
It is generally believed that the price will break out of the triangle in which case you should buy.
However, there are times when the price may not break out of the triangle, but it does not always mean that you should sell. If you are unsure, either wait for a break or place a trailing stop loss order below.
How to trade an ascending triangle
You can trade ascending triangles in forex the same way you would any other chart pattern. The key is to wait for the breakout to occur, then enter your position in accordance with your trading strategy.
The ascending triangle pattern is created when prices alternate between two support and resistance levels.
The convergence of the two trend lines (support and resistance) dictates the direction of the price movement.
In order to successfully trade this pattern, you will need to identify the breakout direction of the pattern accurately before it breaks out.
Once you have spotted an ascending triangle, you should place a buy or sell limit order at the upper or lower limit of the pattern respectively.
The most profitable way to trade an ascending triangle is to wait for it to break out. This means taking a long position when the price of the asset breaks up through the resistance line, and then waiting for it to reach its peak.
If you get in at this point, you will get the best possible price on your trade and enjoy some nice profits.
How to Benefit from Ascending Triangle
An ascending triangle is a technical pattern on the forex charts, which resembles an uptrend. This implies that the prices of these assets are likely to continue rising.
The ascending triangle is a bullish pattern that can be found at the bottom of a downward trend.
It offers investors the opportunity to sell the stock as it makes its way back up, after which they can buy it back once the price starts going down again.
This pattern usually lasts for just a few weeks and often foreshadows an upcoming sharp rise in value for a given stock.
The ascending triangle is a bullish pattern. It is formed when the price keeps throwing back to the upwards trend, but in each upward movement makes a lower high and higher low.
This means that the demand for this currency rises, while its supply remains stable. As such, when the sellers pull back and there are higher highs and higher lows in the chart, it increases the chances of an upward breakout (which can be either to infinity or to new lows).
Conclusion
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Ascending triangles are a bullish chart pattern that is seen on the charts on a long-term view. It’s a signal that indicates an uptrend in the stock. The price range for these patterns is typically narrow and they’re usually symmetrical.