Ascending, Descending and Symmetrical Triangles
Triangles are frequent occurrences on price charts of financial assets like stocks, bonds, and futures.
This pattern earns its name due to its distinctive shape—a contraction in price range bounded by
converging trendlines resembling a triangle. There are three main types: the ascending triangle, the
descending triangle, and the symmetrical triangle. While the triangle’s shape is notable, the crucial
aspect is the direction the market takes upon breaking out of the triangle. Triangles are generally
considered to be continuation patterns, implying a resumption of the prior trend, although they can
sometimes indicate trend reversals.
The ascending triangle forms when the market creates higher lows and roughly the same highs,
establishing an upward trendline and a resistance level. Typically occurring within an uptrend, it
signifies increasing buying pressure pushing towards the upper resistance line of the pattern. While
predominantly seen in uptrends, if spotted in a downtrend, it can signal a potent reversal.
The descending triangle develops when the market creates lower highs and maintains consistent
lows. It combines a downward trendline with a support level. Typically observed in downtrends, it
indicates increasing selling pressure driving towards the lower support line of the pattern. While
commonly found in downtrends, spotting this pattern in an uptrend warrants attention as it can signal a significant reversal.
The symmetrical triangle emerges when the market creates lower highs and higher lows, often
reflecting indecision as neither bulls nor bears dominate. If seen in an uptrend, it signifies a
continuation pattern upon an upside breakout and a reversal pattern upon a downside breakout.
Conversely, in a downtrend, it indicates a continuation pattern if there’s a downside breakout and a
reversal pattern with an upside breakout.
