There are literally so many chart patterns in technical analysis that you might not be able to even recall their names , the head and shoulders pattern, triangle pattern , double top pattern, triple top pattern , flag pattern , rectangle pattern and the list goes on , even the triangle chart pattern has so many types namely symmetrical pattern asymmetrical pattern , the ascending triangle is also a category of the triangle pattern , the ascending triangle pattern is a bullish chart pattern and indicates the further rise of the market .
What is Ascending triangle pattern ?
Ascending triangle pattern is a very important pattern on a technical chart and occurs occasionally but if you have an eye to detect this one then it can reap huge profits for you in the stock market.The ascending triangle pattern occurs when a market starts forming higher lows but the highs of the market are constrained by a resistance area on the technical chart , below we have shown the representation of this chart pattern-
The important characteristic of this pattern is the rising lows or higher lows each time and a resistance area or zone which stops the highs each time from rising further .
The logic behind the ascending triangle pattern –
Most of the websites and youtubers will tell you about this chart pattern but what they won’t tell you is why this is a bullish technical chart pattern and what really goes on in the background as it takes shape, as you must have noticed above that there are rising lows each time in the pattern , what does this indicate ? This indicates that the buyers or bulls are gaining control over the market trend and hence not letting the market fall below the previous low , each time the bears try to gain control the bulls stop them thus forming the higher lows each time .
This formation of higher lows indicate the bullish nature of the market hence threatening the resistance area that is holding the market each time , weakening bears and stronger bulls push forward and breakout the resistance level at last thus taking control of the market trend and establishing the dominance of bulls on the technical chart.
Ascending triangle pattern in Hindustan Unilever
See the technical chart of HUL on NSE , it formed an ascending triangle the orange area is the resistance level that held the highs of the market , the green area is the trendline supporting higher lows , at last the bulls gained control and breached the resistance area and gave a good bullish move , see isn’t it magic ?
Ascending triangle pattern in Ultratech Cement
Look at the technical chart of Ultratech cement on NSE , look how the higher lows were formed each time and the orange resistance level held the highs but at last bulls gained control and breached the resistance to give a sort of windfall bullish move thus establishing the magic and usefulness of the ascending triangle pattern , another thing to note here is that no chart pattern will occur in a text book fashion there will be a little variation , hence practice can only train your eye to spot this beauty each and every time.
Of course you must not just buy because an ascending triangle pattern has occurred , you must time your entry into the market , place a stop loss , calculate the risk and reward ratio and then only enter the trade , any pattern can fail anytime hence a proper risk management startegy should be always in place to avoid any big losses .