Ascending Triangle

The ascending triangle is a bullish formation that usually forms during an uptrend as a continuation pattern. There are instances when ascending triangles form as reversal patterns at the end of a downtrend, but they are typically continuation patterns. Regardless of where they form, ascending triangles are bullish patterns that indicate accumulation. Because of its shape, the pattern can also be referred to as a right-angle triangle. Two or more equal highs form a horizontal line at the top. Two or more rising troughs form an ascending trend line that converges on the horizontal line as it rises. If both lines were extended right, the ascending trend line could act as the hypotenuse of a right triangle. If a perpendicular line were drawn extending down from the left end of the horizontal line, a right triangle would form.

I've found one that has potential, so i am going to use this as a live trade example, as shown below. For the conservative trader, the safest entry would be to wait for price to break above the triangle, and enter as it breaks, or wait and see if price retests the break and establishes support. I'm a much more agressive trader, and am always hungry for more profits if i can get them. Of course, this is more speculative, and strict money management is required.

I've entered today on close @ $2.00, because the candle has a nice wick, which is an indication that buyers gained control late in the day. I'll set my stop on a close below the uptrending line of the triangle, below $1.95.

Disclaimer: The above mentioned information is my opinion only, and NOT to be taken as advice as i am NOT a licensed advisor. Caveat emptor.

Now the tougher part, determining potential targets. One method i like to use is applying the fibonacci retracement tool. I've shown where to apply the tool in this type of setup. Interestingly, the target levels almost coincide with past highs (resistance points). First target will be around $2.15, second target around $2.26.

Disclaimer: The above mentioned information is my opinion only, and NOT to be taken as advice as i am NOT a licensed advisor. Caveat emptor.

Update 4th January 2006: first target hit on 28th December, second target hit today.

Disclaimer: The above mentioned information is my opinion only, and NOT to be taken as advice as i am NOT a licensed advisor. Caveat emptor.