Ascending and Descending Triangles in Technical Analysis

Part of the classic approach to technical analysis, ascending and descending triangles form on every market, and every timeframe. Naturally, they form on the currency market too, but with some particularities.

These particularities are the reason why we present these triangles here. As with many technical analysis concepts, traders must adapt them to the Forex market’s uniqueness.

Before anything, ascending and descending triangles are continuation patterns only. The price advances or declines in a bullish or bearish trend, before stalling at a horizontal level.

This is an essential feature of such triangles. The base is always horizontal, and it is more like an area than a specific level. It is only normal if you come to think of the volatility characteristic to the FX market.

What Makes an Ascending or Descending Triangle

We already mentioned one element part of the pattern: the horizontal base. In a rising trend, the price stalls ahead of a horizontal area, building energy to break higher.

During bearish price action, the price falls aggressively. Suddenly, it stops and bounces for a while, building energy to break lower.

Basically, bulls try to take control in a bearish trend, like bears try the same in a bullish trend. However, the trend is strong enough to continue and, eventually, the horizontal line will give way.

The other element part of the pattern is a series of lower highs or higher lows that forms against the horizontal base.

The recent EURUSD daily timeframe gives the perfect example of a descending triangle. While in a bearish trend, the price hesitated against a horizontal line (the blue area) and bounced.

However, the bounces were shallow and meaningless, in the sense that the series of lower highs (marked with the brown squares) remained in place. Effectively, it shows the market building energy to break lower, and it is just a matter of time until that happened.

These triangles have a measured move, equal with the length of the longest triangle’s segment, projected from the horizontal base. The measured move isn’t there to be used as a take-profit level. Instead, it is just a confirmation of the ascending and descending triangle as continuation patterns.

Conclusion

As continuation patterns, ascending and descending triangles are a great way to position on the right side of the market. The key is to focus on the series of lower highs or higher lows and sell or buy accordingly.

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