Ascending triangles are bullish chart patterns easily recognizable by the shape created by two trendlines. One trendline (A) is drawn horizontally at a level that has historically prevented the price from heading higher (resistance), while the second trendline (B) connects a series of increasing troughs (uptrend).
Traders in stock trading, options trading, and futures trading enter into long positions when the price of the asset breaks above the top resistance. The difference from the start of A and the start of B establishes the height of the triangle. Once resistance is broken, the AB height can be added to resistance level to determine the target on the move.
Here's an example of an ascending triangle in BA:
Let's take a look at this from a measuring perspective as discussed above.
- Height is established at the start of the formation (large white oval). In this case, the start of the uptrend (A) is 32.50 and the start of resistance (B) is 38.50. This results in a height of 6.00 (38.50 - 32.50)
- Once the breakout above resistance takes place (purple oval), the target can be established by adding the height of 6.00 to the breakout point of 38.50. Therefore, the target in this case is 44.50 (38.50 + 6.00).
- The target is represented by the green oval. As you can see BA managed to reach it's target.
Related terms: Descending Triangle, Symmetrical Triangle, Descending Channel, Ascending Channel.