Good day everyone.
Today I'll be discussing on symmetrical triangle patterns.
How it looks, builds up, and plays out.
1.DEFINITION
First of all, What is an Ascending Triangle?
An ascending triangle is a chart pattern used in technical analysis. It is created by price moves that allow for a horizontal line to be drawn along the swing highs, and a rising trendline to be drawn along the swing lows. The two lines form a triangle. Traders often watch for breakouts from triangle patterns. The breakout can occur to the upside or downside. Ascending triangles are often called continuation patterns since the price will typically breakout in the same direction as the trend that was in place just prior to the triangle forming.
2. ENTRY (TRIGGER ENTRY SIGNAL)
In a ascending triangle pattern , you're to trade the breakout or catch the move early at the support. In the ascending triangle pattern, there are three types of entry:
- Buy limit entry (conservative): This is a conservative form of entry which implies buying the breakout above the ascending triangle's horizontal resistance.
This is the safest form of entry.
- Market entry: This is buying at the current market price. It's kind of aggressive in nature. It is buying the market during the formation of the ascending triangle.
- Buy stop limit entry (Aggressive): This is an aggressive form of entry which implies buying at the test of the ascending triangle's inclined support.
This is most profitable form of entry if the trade plays out as expected.
3. TARGET (TAKE PROFIT)
Here, I'll be discussing on your profit target levels in the case of an ascending triangle pattern .
Basically your take profit levels should be where there's a high concentration of sellers such as resistance levels. Further targets are the fibonacci extension levels (1 - 1.272 - 1.414).
4. STOP LOSS AND SETUP INVALIDATION
Stop loss and setup invalidation are quite similar terms but different.
Stop loss is simply a level where you cut your losses when you're currently in a trade. It's like a breathing space for your trade. Your stop losses shouldn't be too tight ( to avoid being hit by stop loss hunting or market noise). It shouldn't be too far also (to give you a good risk to reward ratio (R:R)).
Setup invalidation on the other hand is a pre trade condition. It checks the validity of your setup before your trade. It's the last point that keeps a trade setup valid. When broken, the setup is invalidated ( no longer useful, you'll need to run another analysis).
Setup invalidation and stop loss in an ascending triangle pattern is usually a breakdown below the ascending triangle's inclined support or the previous swing low.
Note: Your stop loss can be less or equal to your setup invalidation, but not greater.
5. TRADE EXAMPLE
I'll be using my analysis on KP3R/BUSD as example of an ascending triangle pattern .
- Trade entry (long order ⬆️): Buy limit entry at the test of the ascending triangle's inclined support. It was an aggressive form of entry.
- Target (take profits levels 🎯): Fibonacci extension levels.
- Setup invalidation and stop loss: breakdown below the ascending triangle's inclined support.
Price brokeout as expected from my previous analysis and hit my targets.
That's that for ascending triangle pattern. I'll be discussing on the falling wedge pattern in my next educational review.
Thank you.
Today I'll be discussing on symmetrical triangle patterns.
How it looks, builds up, and plays out.
1.DEFINITION
First of all, What is an Ascending Triangle?
An ascending triangle is a chart pattern used in technical analysis. It is created by price moves that allow for a horizontal line to be drawn along the swing highs, and a rising trendline to be drawn along the swing lows. The two lines form a triangle. Traders often watch for breakouts from triangle patterns. The breakout can occur to the upside or downside. Ascending triangles are often called continuation patterns since the price will typically breakout in the same direction as the trend that was in place just prior to the triangle forming.
2. ENTRY (TRIGGER ENTRY SIGNAL)
In a ascending triangle pattern , you're to trade the breakout or catch the move early at the support. In the ascending triangle pattern, there are three types of entry:
- Buy limit entry (conservative): This is a conservative form of entry which implies buying the breakout above the ascending triangle's horizontal resistance.
This is the safest form of entry.
- Market entry: This is buying at the current market price. It's kind of aggressive in nature. It is buying the market during the formation of the ascending triangle.
- Buy stop limit entry (Aggressive): This is an aggressive form of entry which implies buying at the test of the ascending triangle's inclined support.
This is most profitable form of entry if the trade plays out as expected.
3. TARGET (TAKE PROFIT)
Here, I'll be discussing on your profit target levels in the case of an ascending triangle pattern .
Basically your take profit levels should be where there's a high concentration of sellers such as resistance levels. Further targets are the fibonacci extension levels (1 - 1.272 - 1.414).
4. STOP LOSS AND SETUP INVALIDATION
Stop loss and setup invalidation are quite similar terms but different.
Stop loss is simply a level where you cut your losses when you're currently in a trade. It's like a breathing space for your trade. Your stop losses shouldn't be too tight ( to avoid being hit by stop loss hunting or market noise). It shouldn't be too far also (to give you a good risk to reward ratio (R:R)).
Setup invalidation on the other hand is a pre trade condition. It checks the validity of your setup before your trade. It's the last point that keeps a trade setup valid. When broken, the setup is invalidated ( no longer useful, you'll need to run another analysis).
Setup invalidation and stop loss in an ascending triangle pattern is usually a breakdown below the ascending triangle's inclined support or the previous swing low.
Note: Your stop loss can be less or equal to your setup invalidation, but not greater.
5. TRADE EXAMPLE
I'll be using my analysis on KP3R/BUSD as example of an ascending triangle pattern .
- Trade entry (long order ⬆️): Buy limit entry at the test of the ascending triangle's inclined support. It was an aggressive form of entry.
- Target (take profits levels 🎯): Fibonacci extension levels.
- Setup invalidation and stop loss: breakdown below the ascending triangle's inclined support.
Price brokeout as expected from my previous analysis and hit my targets.
That's that for ascending triangle pattern. I'll be discussing on the falling wedge pattern in my next educational review.
Thank you.
